CBN Debunks Rumours on Plan to Convert Bank Customers’ Foreign Currency into Naira

…Strengthens supervision of banks’ compliance with new forex regime

The Central Bank of Nigeria (CBN) yesterday dispelled speculations that it was planning to convert the foreign currency (FX) in domiciliary accounts of bank customers into naira.

The bank further assured members of the public that it would monitor the commercial banks to ensure they meet the legitimate FX demands of customers.

The bank’s Acting Director in charge of Corporate Communications, Osita Nwanisobi, dismissed insinuations in some quarters that the central bank planned to convert FX in the domiciliary accounts of customers into naira in order to check purported shortage of availability of the dollars.

He stressed that the CBN never planned to tamper with the FX deposits in the accounts of customers, adding that those making such allegations were criminal speculators whose intention was to create panic in the foreign exchange market.

The CBN director insisted that at no time did the bank ever suggested or implied that it would tinker with the foreign currency (FX) deposits of customers.

He therefore, urged operators of domiciliary accounts and other members of the banking public to go about their legitimate FX transactions and disregard fictitious stories aimed at pitching them against the bank and triggering chaos in the system.

The CBN Governor, Mr. Godwin Emefiele, had at the recent Monetary Policy Committee meeting (MPC) announced that the apex bank would stop the weekly sale of foreign exchange to Bureaux De Change (BDCs), pointing out that deposit money banks would henceforth meet the FX needs of to customers.

Consequently, banks chief executives had met at the weekend and affirmed their readiness to meet the FX demands from genuine end-users as directed by the CBN.

Emefiele had while addressing journalists at the end of the two-day deliberations of the MPC, accused BDCs of total disregard for the CBN policies introduced to achieve its mandate of safeguarding the value of the naira among others.

He said:”In particular, we have noted with disappointment and great concern that our BDC operators have abandoned the original objectives of their establishment which was to serve retail end users who need $5,000 or less.

“Instead, they have become wholesale dealers dealing in forex to the tune of millions of dollars per transaction, despite the fact that Nigeria is the only country in the world today where a central bank sells dollar directly to BDC operators.”

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He said operators in the BDC segment had failed to reciprocate the bank’s gesture to help maintain price stability to the large market.

The CBN said:”Whereas, the bank has understanding with BDC operators that they make small margins from the US dollar allocated to them, they have reneged and become somewhat greedy, recalcitrant with abnormal high profits while ordinary Nigerians have been left to feel the pain and therefore suffer.”

Emefiele further lamented that rather than work to achieve the laudable objectives for which they were licensed, the bank had observed various unwholesome practices by the BDCs.

These included the gradual dollarisation of the Nigerian economy with attendant adverse consequences on the conduct of monetary policy and subversion of the cashless policy initiatives of the CBN.

He said BDCs had resorted into financing of unauthorised transactions with forex procured from the CBN among other infractions against CBN regulations.