Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has underscored the importance of the newly introduced Electronic Foreign Exchange Matching System (EFEMS) as a key step towards ensuring transparency and efficiency in the nation’s forex market.
Speaking at a Harvard Club of Nigeria event in Lagos over the weekend, Cardoso emphasized that the CBN is committed to restoring public trust in its policies.
Announced on October 3, 2024, the EFEMS aims to enhance the regulation of foreign exchange transactions in Nigeria. Cardoso explained that trust is central to the success of any central banking institution, and without it, policies lose their effectiveness.
“By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets,” he said.
He highlighted the tough choices involved in managing the central bank, reiterating that leadership often requires making decisions that may be unpopular but necessary for long-term stability. One such decision was floating the naira to align the official exchange rate with market realities.
Cardoso defended the move, stating that the disparity between the official and parallel rates had encouraged speculative trading and damaged market trust. The new policies, while challenging in the short term, have started to stabilize the forex markets.
Cardoso also emphasized the CBN’s focus on combating inflation, noting that the recent increases in the Monetary Policy Rate (MPR) to 27.25% were crucial to containing excess money in circulation.
While acknowledging that inflation control remains a work in progress, he pointed to recent positive trends reported by the National Bureau of Statistics as evidence that the CBN is moving in the right direction.
The governor stressed the importance of effective communication and transparency, noting that providing clear and regular updates is vital for maintaining public trust.
“Trust is built on the belief that a central bank will take the necessary steps to maintain economic stability — even when those steps are uncomfortable or politically contentious,” Cardoso concluded.
The CBN, under Cardoso’s leadership, remains committed to its core mandate of ensuring price stability and restoring the credibility of Nigeria’s financial system.