The Central Bank of Nigeria (CBN) has announced its intention to carry out a fresh round of banking recapitalization for the Deposit Money Banks (DMBs).
Mr Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), announced on Friday night during the 58th Annual Bankers’ Dinner in Lagos, organized by the Chartered Institute of Bankers of Nigeria (CIBN).
The planned recapitalization means that DMBs will be required to raise additional capital to meet the demands of Nigeria’s economy.
Cardoso highlighted that in his report to the Policy Advisory Council on the national economy, President Bola Ahmed Tinubu set an ambitious target of reaching a $1 trillion Gross Domestic Product (GDP) by 2030.
The report outlined specific priority areas and strategies to achieve this goal.
According to him, banks play a significant part in the envisaged $1 trillion economy by 2030.
Speaking on the process of recapitalization, Cardoso highlighted the crucial need for banks to be recapitalized, considering the substantial developmental role the apex bank anticipates them to fulfil over the next seven years.
To achieve the target, Cardoso said that Nigeria needed to experience a more rapid and inclusive economic expansion.
Furthermore, the CBN governor also announced the approval of another round of Open Market Operations (OMOs) to mop up excess liquidity from the banking system.
OMOs are the primary tool for monetary policy, allowing the central bank to trade securities with financial institutions in open markets.
This strategic buying or selling influences the circulating money supply and/or interest rates.
Cardoso said,
The CBN governor further stated that the monetary policy instruments will be used to curb inflation and stabilize the foreign exchange market, rather than utilized for development financing.
