SAT, NOV 25 2023-theGBJournal|The Governor of Central Bank of Nigeria (CBN), Yemi Cardoso on Friday unveiled the apex bank’s Monetary Policy Thrust and Economic Outlook for 2024, hinting at a possible fresh banks recapitalization.
The Governor unveiled the outlook during an appearance at the 58th Annual Chartered Institute of Banker’s of Nigeria Dinner where he gave the keynote address.
”The CBN will 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,” Cardoso said.
The CBN Governor also hinted at the introduction of a new set of foreign exchange laws and guidelines to address naira depreciation and achieve exchange rate stability.
Cardoso also disclosed that the CBN will introduce a new licensing framework for fintechs and payment banks, warning that operators found engaging in activities outside their licenses will be sanctioned.
Citing the need to curtail the challenge of rising inflation, Cardoso said the apex bank will further tighten money supply for the next two quarters. He added that to further reduce excess cash in the banking system the management of the CBN has approved and will soon conduct another round of liquidity mop up via issuance of Open Market Operations, OMO, treasury bills.
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.”
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