The Central Bank of Nigeria (CBN) has strengthened the country’s financial system, and the Association of Bank Directors Association of Nigeria (BDAN) has praised the CBN’s efforts, saying they demonstrate the central bank’s dedication to maintaining the stability and resilience of the banking industry.
The CBN leadership expressed concerns about banks’ increasing foreign currency exposure by issuing a circular titled “Harmonization of reporting requirements on foreign currency exposures of banks.” The circular stated that the net open position (NOP) for all foreign currency assets and liabilities should not surpass 20% short or 0% long of shareholders’ funds.
Mustafa Chike-Obi, the chairman of BDAN, stated that the instruction was essential to guaranteeing the efficient management of foreign exchange exposures, in addition to the other prudential measures mentioned in the circular.
“The CBN sought to mitigate potential losses that could present significant systemic challenges by imposing these limits,” he stated.
He further stated that the regulatory actions represent a calculated move to support risk control, accountability, and transparency in the financial sector and praised the CBN for taking the initiative to protect depositors’, investors’, and the nation’s overall economic interests.
Chike-Obi commended CBN’s dedication to proactive regulation and revealed that the association continued to support initiatives that promote the stability and prosperity of the economy. He also revealed that the requirements were seen as a positive step towards building a resilient financial landscape and preventing negative effects on the sector.
In order to achieve full compliance, he urged all banks to actively engage in the implementation process and fully comply with the new instructions.
As proponents of ethical behavior and responsible banking, “we acknowledge the work undertaken by the CBN in consulting stakeholders and experts to ensure a balanced and effective regulatory approach,” and “we believe these guidelines will significantly contribute to our long-term sustainability and growth,” he stated.
He reaffirmed that they fully support the actions being taken to strengthen the effectiveness of the banking system and pledged to work in tandem with the apex bank and other stakeholders to develop a robust financial ecosystem that serves the interests of all.
