CBN admits weak links in cash withdrawals, raises policy rate

The Central Bank of Nigeria, CBN, has admitted failures in the online payment channels that have frustrated banks’ customers in the past two months.Information Guide Nigeria

The apex bank has raised its Monetary Policy Rate, MPR by 50 basis points to 18%, from 17.5%, the fifth consecutive raise in the past nine months in a bid to rein in inflationary pressures.

The CBN Governor, Godwin Emefiele disclosed this while speaking to journalists at the end of the Monetary Policy Committee, MPC meeting in Abuja yesterday.

Emefiele said the CBN is aware of the limitations of cash withdrawals with frequent downtime in bank transaction channels and urged online payment platforms to urgently overcome the challenges quickly in the interests of the banking public.NYSC Portal

According to VANGUARD, he stated: “I must apologise, yes, online channels failed. But no doubt it is as a result of the deluge of online transactions that hit the banking industry.

“But it is being resolved. On a daily basis, our Payment System Management Department monitors the online payment platforms so as to make sure that when there is a downtime, they are quickly resolved so that transactions can go on smoothly.”

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Emefiele said the implementation  “has resulted in the reduction in currency outside the banks, indicating expected improvement in the potency of monetary policy tools.”

He further stated, “At the beginning of the Naira Redesign policy we said that there was about N3.23 trillion in circulation out of which only N500 billion was held in the banking system, while N2.73 trillion was outside the banks.

“It was published yesterday that currency in circulation is close to N1 trillion CBN continue to pump the newly redesigned currency into the market. The truth is that at some point we will need to re-assess to know whether the currency in circulation has attained an optimal level so as to put in place measures to ensure that we don’t go to the level where we were when people kept money outside the banking system for their own benefits”.

On the decision to further tighten the monetary rate, VANGUARD reports that Emefiele said, “MPC examined the impact of possible further rate hike on the stability of the banking system and was convinced that a further rate hike would not have a negative impact.”

He added, “Following new risks of financial contagion emerging from the scenario of failed banks in some advanced economies, members (of the PMC) examined the possibility of shocks in the Nigerians banking system and concluded that Nigerian banks remain considerably insulated from such likely contagion.

Speaking further on the inflationary pressures in the economy, Emefiele stated, “The MPC observed the continual upward risks to price development around the expectations of the removal of the PMS (Premium Petroleum Spirit) subsidy, rising prices of other energy sources, continued exchange rate pressure and uncertain climatic conditions. These, in the view of members, provided a compelling argument for an upward adjustment of policy rate, albeit, less aggressively.”JAMB Result