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Cash Crisis: Emefiele apologises over transaction failures

As Nigerians continue to battle with the current cash crisis in the country, the Central Bank of Nigeria (CBN) has apologised over the glitches encountered in utilising the online channels to process their cashless transactions. The CBN Governor, Mr. Godwin Emefiele, tendered the apology yesterday on behalf of lending banks with assurance that a process has been put in place to remedy the situation.

Also yesterday, the apex bank, for the umpteenth time, increased the Monetary Policy Rate (MPR) by 50 basis points to 18 per cent to rein in inflationary pressures. While it hiked MPR by 50 basis points around an asymmetric corridor of -100/+70, it left Cash Reserves Requirement (CRR) and liquidity unchanged at 32.5 per cent and 30 per cent. Emefiele expressed hope of a deceleration in the inflation rate.

Addressing journalists at the Monetary Policy Committee meeting (MPC) in Abuja, he said the bank was assessing the level of currency notes in circulation with a view to ascertain the next step to take. Nigerians have been experiencing cash squeeze following CBN’s redesign of naira notes and introduction of a cashless policy. Asked if the level of currency notes in circulation was sufficient, Emefiele said the bank would re-access it again to know whether the currency in circulation had attained an optimal level to be able to put in place measures that will ensure the country does not go back to the previous position when people were keeping a lot of money outside the banking system for their own benefit. “Before the naira redesign, we said there was about N3.23 trillion in circulation out of which only N5 billion was being held in the banking system and N2.73 trillion was being held outside the banking system. “It was published in newspapers yesterday that the currency in circulation is roughly close to N3 trillion and CBN continues to pump the newly designed currency into the market.

“The truth is that at some point we will need to re-access again to know whether the currency in circulation has attained an optimal level and so as to be able to put in place measures that will ensure that we don’t go back to what we had before where people were keeping a lot of money outside the banking system for their own benefit and the rest of them.” Apologising to Nigerians for hitches encountered utilising various online channels for the cashless transaction, he attributed the failings to deluge in volume of online transactions. On steps being taken by the bank to decelerate inflationary pressure, he said the bank was going about in a manner that it won’t hurt banks and the economy. Emefiele said CBN adopted moderate tightening to achieve a level of reduction in inflation as against adopting aggressive tightening that will impact negatively on the banking and financial system.

According to the CBN governor, while the bank is keen to reduce inflation, it is careful not to do it in a way that will upset the economy. Asked if inflation could be reduced to single digit level by May this year, Emefiele said it would be an impossible task to achieve given the Federal Government’s plan to end fuel subsidies. “Whether we like it or not, before the end of this administration, we expect that petrol subsidies will disappear. Subsidy removal has its own implications on inflation. MPC feels that we need to continue tightening. The Monetary Policy Committee is not optimistic that prices are going to come down because of these measures so they feel that we continue to tighten; that is what we did at this meeting. “The important thing is for us to continue to look at what the margin is between policy rate and inflation.” He said that CBN had put in place prudential guidelines, rules and regulations that isolate the Nigerian banking industry from the sort of risk that happened recently in the United States, where two banks collapsed. He said Nigeria banks were resilient to headwinds due to a series of prudential guidelines designed by the apex bank to shield them from such.

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