Governor of Central Bank of Nigeria, CBN, Yemi Cardoso says the apex bank 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.
Speaking at the Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria, CIBN, Cardoso added that the CBN would also introduce a new set of foreign exchange laws and guidelines to address naira depreciation and achieve exchange rate stability.
He said, “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.”
Citing the need to curtail the challenge of rising inflation, Cardoso said the apex bank will further tighten the 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, and treasury bills.
