WorldStage Newsonline– Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) rose from its two-day meeting on Tuesday with a resolution to retain the Monetary Policy Rate(MPR) at 14%, Cash Reserve Ratio at 22.5%; Liquidity ratio at 30% and asymmetric window at +200-500 basis point.
Central Bank Governor Mr. Godwin Emefiele who read the communiqué of the meeting in Abuja, noted that eight member out of nine voted to retain MPR while one member voted for an increase.
Menawhile, he said the CBN was setting up a framework to penalize deposit money banks who preffered to keep liquidity and trade on government security rather than granting loan to the real sector.
He said the apex bank would adopt also adopt innovative ways to encourage money deposit banks to accelerate credit growth to the real sector of the economy, saying, as much as possible “we do not want to go back to the era of process sector lending and sectoral allocation, we would not, because that is not supposed to be the intention.
“We will try as much as possible to come up with some decisions that will relate loan deposit ratio with a level of cash reserves that a bank holds, so as to direct a bank or compensate a bank that has done a lot of work in boosting its own deposit ratio through compensating them with URR and penalize those who proffered to keep liquidity and trade on government security or direct to those to the exchange market rather than granting loan to the real sector.”
On the currency swap deal between CBN and People’s Bank of China, Emefiele said it would boost trade relations between both countries when normal formal or local currency transaction happens.
According to him,” Some importers from England that will give invoice in Pounds Sterling if you want to import goods from England or in Europe, they will issue you invoices in Euro as against the dollars if the choices are theirs.
“So under the China -Nigeria deal is that, foremen or whatever name to be called by the time the framework is released, we would begin to see based on negotiation with Nigerian suppliers that Chinese suppliers would begin to issue invoices in NLB.”
He noted that Standard Chartered Bank and Stanbic IBTC bank are the two banks chosen as settlement banks, saying they have affiliation with the Bank of China that will be the correspondent banks at the Chinese ends.
According to him, China is Nigeria’s largest trading partner, controlling close to 35 percent of total trade.
“This was a negotiation that was painstakingly done and I’m optimistic that Nigerians will reap the positive impact from this and we do expect that by the time the framework is released, and Nigeria will end up being the remedy trade hub in the West African sub-region because there are currently only three countries in Africa that enjoy the currency swap deal between China and themselves: South Africa, Egypt and Nigeria,” he said.
