CBN reiterates commitment to financial system stability

As part of its ongoing efforts at ensuring overall growth of the Nigerian economy, the Central Bank of Nigeria (CBN) has reiterated its commitment to the nation’s financial system stability.

The apex bank promised that it will remain committed to its mandate of ensuring a sound financial system, as well as promoting sustainable economic development in the country.

Speaking at the maiden Financial Journalists’ and Banks’ Image Makers’ Parley, organised by the Centre for Financial Journalism (CFJ Nigeria), the Deputy Governor, Corporate Services, CBN, Adebayo Adelabu, said that the CBN Act of 2007 charges the Bank with the overall control and administration of the monetary and financial sector policies of the Federal Government.

While explaining the roles of the CBN in ensuring financial system stability in the country, Adelabu noted that the CBN is charged to ensure monetary and price stability; issue legal tender currency in Nigeria; maintain external reserves to safeguard the international value of the legal tender currency; promote a sound financial system in Nigeria; and act as Banker and provide economic and financial advice to the Federal Government.

Consequently, the Bank is charged with the responsibility of administering the Banks and Other Financial Institutions Act (1991), otherwise known as BOFIA, as amended, with the sole aim of ensuring high standards of banking practice and financial stability through its surveillance activities, as well as the promotion of an efficient payment system.

He, however, pointed that in more recent years, the CBN, in addition to its core monetary functions, has performed some major developmental functions, by intervening in the entire key sectors of the Nigerian economy namely: financial, agricultural and industrial sectors. Overall, these mandates are carried out by the Bank through its various departments.

Adelabu explained further that in an effort to pursuit its mandate, the CBN established relevant departments to entrench a supervisory and regulatory regime that promotes a sound and stable financial system in Nigeria.

The departments are: “The Banking Supervision Department (BSD), Other Financial Institutions Supervision Department (OFISD), Financial Policy and Regulation Department (FPRD), and Consumer Protection Department (CPD). Through these departments, it conducts on-site examinations and off-site monitoring, and acts as the lender of last resort to provide liquidity when and where necessary.

Although, he agreed that the global financial system, in recent times, has witnessed series of shocks, which Nigeria is not immune to.

His words: “Since the corresponding period of 2014, several major financial system stability issues have continued to stare Nigeria in the face. Specifically, there has been a significant drop in the price of crude oil, which constitutes the largest component of our FOREX reserves.”

There has also been a global growth slowdown and geopolitical tensions along critical trading routes in the world; and Normalization of Monetary Policy by the United States’ Federal Reserve. All these have contributed to mount huge pressure on the naira in the foreign exchange market, leading to scarcity of foreign exchange and significant depletion of the external reserves from heights of US$42.8 billion about two years ago to less than US$30 billion in June 2016.

Meanwhile, he said that the initiative is to provide a conducive and enabling atmosphere for educating and improving the capacity of finance correspondents and business editors, so as to correctly interpret and report on contemporary economic and financial issues, as well as CBN policies and initiatives.

According to him, for us at the CBN, we respect the media and place a high premium on our relationship with you.

“As you are no doubt aware, beyond the periodic press briefings, the Bank, since 1996, has been engaging with the media at an annual meeting for Business Editors and Financial Correspondents.

“Also, to acquaint the media of the thinking behind the decisions taken by the Bank in ensuring the delivery of price and financial system stability”, he said.