We have reduced banking liquidity to under N100bn in November — CBN
The Central Bank of Nigeria (CBN) has declared that its policy strategies have contributed to the reduction of liquidity in the banking sector to under N100billion as at November 2023.
Speaking at the 60th Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), the Governor of the CBN, Mr Olayemi Cardoso made this known.
Commenting on the effectiveness of the Central Bank’s monetary policy tools, the CBN Governor said the apex bank has spent time fixing the transmission mechanism to ensure the decisions of MPC meetings actually result in desired objectives.
Highlighting some of the initiatives and policy successes, Cardoso said, “Regular Open Market Operations (OMO) to mop up excess liquidity from the banking system. An OMO auction was recently held with a stop rate of 17.5 percent for the one-year tenor, attracting oversubscription of N350 billion. Another round of OMO has been approved to further reduce excess liquidity.
“Offering N108.1 billion worth of Treasury Bills with three tenors to the investing public, which can help reduce liquidity in the banking system and support government fundraising.
“Removal of the cap on the remunerable Standing Deposit Facility (SDF) to increase activity in the SDF window and manage liquidity.
“Sustained Cash Reserve Requirement (CRR) debits, which have moderated liquidity in September and October 2023. Liquidity in the entire banking sector has been significantly reduced to under N100 billion in November.
“Inauguration of a new liquidity management committee within the Bank that meets daily at 8am to assess liquidity conditions and ensure optimal levels.
“These measures have already started to yield results, as excess liquidity in the banking system has significantly reduced and the Overnight Bank Borrowing (OBB) rate has increased to a level consistent with the monetary policy program. Month-on-month inflation has also begun to decline, with a growth rate of 0.67 percent in October compared to 0.97 percent previously.”
The Governor further explained that through targeted policies, transparent market operations, and coordination between monetary and fiscal authorities, the Apex Bank can ensure a more stable exchange rate, control inflation, and create an enabling environment for businesses and individuals to thrive.
