In order to combat Naira depreciation and establish currency rate stability, the governor of the Central Bank of Nigeria, or CBN, Mr. Yemi Cardoso, has said that the bank will shortly publish a new set of foreign exchange legislation and guidelines.
Cardoso made the announcement on Friday, November 24, during the keynote address of the Chartered Institute of Bankers of Nigeria (CIBN) 2023 Annual Bankers Dinner. He said that in addition, the banking industry will undergo a new recapitalization exercise, with banks being instructed to raise their minimum capital base to a level that will support the $1 trillion 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.
“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.”
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.”