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CBN, FG, Deny Planning to Convert Funds in Nigeria Domiciliary Accounts to Naira

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By Uche Amunike

The Central Bank of Nigeria has confirmed, Saturday, that contrary to speculations going on, it has no plans of converting monies in Nigeria domiciliary accounts to Naira, under any circumstance.

Speaking, through a statement signed by the acting speak spokesperson of the Apex bank, Sidi Ali, she said that the bank was doing everything to stabilize the foreign exchange markets ‘as evidenced by its recent work and policy directions’.

According to the statement, the CBN had a priority which was to build the confidence of citizens in the country against doing anything that will undermine the currency and the economy, reiterating that they had no plans that will militate towards converting funds in Nigeria’s domiciliary accounts to the Naria.

It partly read: ‘the bank is the only designated authority for monetary policy changes and will always advise on any policy change(s) before they are brought into operation. The CBN is always open to answer questions about our policies.’

An earlier report by Saturday Punch had stated that the federal government is also making plans to introduce a policy that you bring about converting funds in Nigeria domiciliary accounts, belonging to citizens, to the Naira, as a way to stabilize  the national currency which recorded its worst performance in the history of the country, early last week.

According to the report, if the CBN goes on with the plan, the Tinubu-led  government of Nigeria may consider converting foreign currencies that are saved in individuals’ and companies’ domiciliary accounts to dollar at a rate that will be determined by the apex bank.

As earlier mentioned by the Punch, the CBN showed concern over the rise in foreign currency exposures of banks through their Net Open Position, as earlier announced in a circular that was signed by its Director, Trade and Exchange, Dr. Hassan Mahmud and the Director, Banking Supervision, Mrs Rita Sike.

According to the bank, such foreign currency positions expose banks to foreign exchange and many other risks. They further stated that they have issued new prudential requirements which banks are expected to comply with, in order to show that these risks are well-managed and avoid losses that are capable of posing material systemic challenges.

The CBN also stated that the Net Open Position limit of the overall foreign currency assets and liabilities should not exceed 20% short or 0% long of shareholders’ funds not impaired by losses using the Gross Aggregate Method, even as they take cognizance of both those on and off-balance sheets.

As for banks whose current Net Open Position are higher than 20% short and 0% long of their shareholders’ funds that are not impaired by losses, they are required to bring them to the prudential limit by February 1, 2024.

Furthermore, the apex bank requires that they make use of their approved templates to compute their daily and monthly Net Open Positions, as well as their foreign currency trading position.

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