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CBN Will Introduce New FX Laws and Guidelines to Tackle Naira Depreciation — Cardoso

Governor of Central Bank of Nigeria, CBN, Mr Yemi Cardoso has stated that the apex bank will soon introduce a new set of foreign exchange laws and guidelines to tackle Naira depreciation and achieve exchange rate stability.

CBN Will Introduce New FX Laws and Guidelines to Tackle Naira Depreciation — Cardoso

Cardoso who made the announcement while giving a keynote speech at the 2023 Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), on Friday November 24, said they will also conduct a new recapitalisation exercise for the banking industry, by directing banks to increase their minimum capital base to a level sufficient to support the vision of a $1trillion economy.

He said; 

“Our monetary policies will aim to achieve price stability, foster sustainable economic growth, stabilize the exchange rate of the naira, and reduce interest rates to facilitate borrowing and investments in the real sector. In order to ensure the proper functioning of domestic and foreign currency markets, clear, transparent, and harmonized rules governing market operations are  essential. “New foreign exchange guidelines and legislation will be developed, and extensive consultations will be conducted with banks and FX market operators before implementing any new requirements.

CBN Will Introduce New FX Laws and Guidelines to Tackle Naira Depreciation — Cardoso

“Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the  adequacy of our banking industry to serve the envisioned larger economy. It is not just about the stability of the financial system in the present moment, as we have already established that the current assessment shows stability. 

“However, we need to ask ourselves: Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. 

“Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital.”

CBN Will Introduce New FX Laws and Guidelines to Tackle Naira Depreciation — Cardoso

On new licensing framework for fintechs, Cardoso said:

“Technology will continue to play a critical role in delivering financial services and enhancing financial inclusion.  

“However, recent developments in the payment services landscape have raised concerns regarding the use of technology and the existing licensing and regulatory framework. We have observed that some licensees are operating outside the approved activities, breaching the boundaries set for them. 

“Any intentional or unintended noncompliance will be subject to sanctions, as operators have the responsibility to ensure that they are licensed for the activities they undertake.

 “Concurrently, as we conduct a comprehensive review of the licensing framework for payment services, we will engage in extensive consultations to develop a new regulatory and compliance framework that is suitable for the technology-driven payment services sector.”

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