The Central Bank of Nigeria (CBN) plays a vital role in ensuring the stability of Nigeria’s financial system, which is fundamental for the country’s economic growth. Through a variety of regulatory measures, the CBN works to prevent excessive risk-taking and maintain transparency within financial institutions. This oversight ensures that the financial system remains resilient, promoting economic progress without endangering the system’s overall stability.
Under the leadership of Governor Olayemi Cardoso, the CBN has introduced several important reforms, including the establishment of a new compliance department. The department, which is set to become operational by February 2025, will help address past challenges, improve transparency, and align Nigeria’s financial practices with global standards. This is a key step in enhancing both internal and external accountability within the financial sector, ensuring better governance and stronger regulatory frameworks.
Another significant reform is the introduction of a foreign exchange (FX) code to regulate market participants more effectively. The CBN aims to ensure fair practices in the foreign exchange market while also stabilizing the naira. These measures are designed to foster a more competitive business environment, attract foreign investments, and support fiscal operations, ultimately strengthening Nigeria’s economy and ensuring exchange rate stability.
Despite challenges like the legal issues surrounding Keystone Bank, the CBN has reassured the public that the bank remains operational and stable. Following a court ruling that forfeited the bank’s shares to the Federal Government, the CBN clarified that the decision did not affect the bank’s financial health. The central bank has continued to monitor Keystone Bank closely to ensure compliance with regulatory standards and to protect the interests of depositors.
Additionally, the CBN launched a bank recapitalization initiative in 2024, with banks raising over N1.27 trillion by October to meet new capital requirements. This initiative aims to strengthen banks’ ability to support Nigeria’s economic growth targets and enhance their capacity to absorb financial shocks. The CBN’s ongoing collaboration with other regulatory bodies, including the Nigeria Deposit Insurance Corporation (NDIC) and the Securities and Exchange Commission (SEC), further ensures comprehensive oversight of the financial system, reinforcing its stability and growth potential.
SOURCE: THE SUN