Scribd
Upload
18 views

One Notable

THE ROLES, STRUCTURE AND RESPONSIBILITIES OF THE CENTRAL BANKS OF NIGERIA

Uploaded by

Tande Semeton
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
18 views

One Notable

THE ROLES, STRUCTURE AND RESPONSIBILITIES OF THE CENTRAL BANKS OF NIGERIA

Uploaded by

Tande Semeton
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

One notable event where the Central Bank of Nigeria (CBN) acted as a lender of last resort was during

the 2009 global financial crisis.

2009 Banking Crisis:

In 2009, Nigeria's banking sector faced a severe crisis due to:

1. Excessive lending to the oil and gas sector.

2. Weak corporate governance.

3. Insufficient risk management.

4. Global economic downturn.

Several Nigerian banks faced liquidity challenges, and some were on the verge of collapse.

To prevent a systemic crisis, the CBN, under Governor Sanusi Lamido Sanusi, intervened by:

1. Providing liquidity support to affected banks.

2. Injecting N600 billion (approximately $3.7 billion) into the banking system.

3. Taking over management of eight troubled banks.

4. Establishing the Asset Management Corporation of Nigeria (AMCON) to manage toxic assets.

CBN provided financial assistance to:

1. Afribank Plc (now Mainstreet Bank)

2. Bank PHB (now Keystone Bank)


3. Finbank Plc (now FCMB)

4. Intercontinental Bank Plc (now Access Bank)

5. Oceanic Bank International (now Ecobank)

6. Spring Bank Plc (now Enterprise Bank)

7. Union Bank of Nigeria Plc

8. Wema Bank Plc

The CBN's intervention:

1. Stabilized the banking system.

2. Prevented widespread bank failures.

3. Maintained public confidence.

4. Facilitated economic recovery.

This event demonstrates the CBN's role as a lender of last resort, ensuring financial stability and
preventing systemic crises.

Another notable event where the Central Bank of Nigeria (CBN) maintained monetary stability was
during the COVID-19 pandemic (2020-2022). Under the Government of Emefiele

2020 COVID-19 Pandemic

The pandemic led to:

1. Global economic downturn


2. Oil price crash

3. Disruptions in global supply chains

4. Reduced government revenue

5. Increased inflationary pressures

Then CBN intervene to maintain monetary stability by

• Monetary Policy Easing: The CBN reduced the Monetary Policy Rate (MPR) from 13.5% to 11.5% to
stimulate economic growth. This move aimed to increase lending and reduce borrowing costs ¹.

• Stimulus Packages: The CBN provided N3.5 trillion (∼$9 billion) in stimulus packages to support
businesses and individuals affected by the economic downturn. This package helped inject liquidity into
the economy ¹.

• Foreign Exchange Management: The CBN introduced measures to stabilize the Naira, ensuring
exchange rate stability and maintaining foreign exchange reserves. This helped maintain confidence in
the Nigerian currency ¹.

• Liquidity Support: The CBN provided liquidity to banks and the economy to prevent a credit crunch.
This ensured that businesses and individuals had access to credit facilities ¹.

• Regulatory Forbearance: The CBN relaxed regulatory requirements for banks, allowing them to
restructure loans and reduce non-performing loans. This helped maintain financial stability and
prevented a banking crisis [3).

These measures demonstrate the CBN's commitment to maintaining monetary stability, promoting
economic growth, and ensuring financial system soundness

One notable event where the Central Bank of Nigeria (CBN) advised the federal government on financial
policy was during the 2020 COVID-19 pandemic.
In response to the pandemic's economic impact, the CBN, under Governor Godwin Emefiele, advised the
federal government on several financial policy measures:

1. Fiscal Stimulus Package: N2.3 Trillion (∼$6 Billion)

To Support businesses and individuals affected by the pandemic.

2. Monetary Policy Easing

To Stimulate economic growth by reducing borrowing costs.

3. Foreign Exchange Management:

To Stabilize the Naira and maintain foreign exchange reserves.

4. Loan Restructuring

To Support affected businesses by restructuring loans.

5. Financial Inclusion:

Promote digital payment systems and reduce physical cash handling.

These recommendations aimed to:

1. Stimulate economic growth.

2. Support businesses and individuals.

3. Maintain financial stability.

4. Enhance financial inclusion.

5. Mitigate the pandemic's economic impact.

The CBN's proactive measures helped Nigeria's economy recover from the pandemic's effects.

You might also like