Cardoso: CBN to Streamline BDCs for Greater Efficiency

•Says tackling fundamental issues will stabilise naira 

•Hints dollar earning agencies may remit earnings directly to the CBN

James Emejo in Abuja

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has indicated that the apex bank is currently devising strategies to revamp the Bureau de Change (BDC) segment for enhanced efficiency.

He said the aim was to streamline their numbers for better management and supervision.

The central bank governor disclosed this in an interview with Arise TV, the broadcast arm of THISDAY, where he addressed several policy initiatives of the bank and the economy in general.

He also said that in the short term, the bank has put in significant work as well as witnessed results in improving the market structures and removing all the bottlenecks stifling the supply of FX into the country.

Cardoso said, “We have addressed the challenges to remittance flows, reduced the ability of banks to hold on to positions, and more importantly, we now have the export proceeds from the national energy sector flowing back through the central bank. We have also initiated several short-term measures to make naira assets attractive to foreign investors.”

The CBN governor said, “Our policy focus is on achieving rate stability and maintaining market flexibility and liquidity. The move to unify the naira exchange rate and lift currency trading restrictions in June 2023 aims to establish market-driven rates through price discovery.

“This strategy seeks to create a more efficient and transparent FX market to boost investor confidence and reduce market volatility.

“Over the past six months, the bank has taken deliberate steps to enhance liquidity and FX supply in the forex market. All FX transaction windows have been consolidated into the NAFEM platform.”

He said, “Outstanding FX obligations, particularly those of foreign airlines, have been progressively settled. Enhanced monitoring of FX market activities and a continued emphasis on transparency and price discovery are key priorities. These efforts will be further consolidated in the future.”

He said the eventual stability of the Naira will be driven by the bank’s ability to address the fundamental issues affecting the economy including bringing inflation under control and promoting the growth of Nigerian businesses to eventually export much more than the consumes as a nation.

Cardoso, further explained that the recent removal of the exchange rate cap by the CBN was to enable International Money Transfer Operators (IMTOS) to disburse remittances at market-determined rates without restrictions, following a willing seller, willing buyer approach.

Additionally, he said the transfer of the NNPC account to the CBN, as directed by Mr. President, was meant to increase liquidity in the market, adding that these measures aim to address the FX market’s liquidity challenges, streamline capital flows, and mitigate currency risks.

Also, he said in line with coordinated monetary and fiscal policies, efforts are underway to ensure that all USD-earning agencies and parastatals remit their earnings directly to the CBN to enhance transparency and liquidity in the FX market.

Among other things, the CBN governor also said the bank was exploring mechanisms to incentivise individuals holding foreign currency (FCY) outside the banking system to deposit these funds within the banking system, necessitating the establishment of a legal framework.

He added that discussions are underway on introducing a single FCY gateway bank to centralise all correspondent banking activities, currently dominated by two major banks in the corresponding banking space.

He also said the central bank was strengthening surveillance and technological capabilities to monitor cryptocurrency transactions effectively.