The primary functions of central banks are formulating and implementing monetary policy, regulating and supervising the banking and financial system, managing foreign reserve and ensuring financial market stability, determining interest rate and directing money supply to achieve price stability.
The financial system is of prime importance in driving the economy. It is the axle on which the wheel of economy revolves. Financial system stability is linked to monetary policy. A stable financial system engenders macro-economic stability which enables businesses to plan.
Financial system instability is detrimental to the economy. Experts have identified that financial system instability is caused by multiple factors with complex dynamics such as global imbalances, under-regulation/supervision, market liberalisation and insufficient transparency.
Other factors include complex risks, exchange rate risks and contagion, interest rate risks, information asymmetry, poor corporate governance, moral hazards and irrational exuberances.
After the 2008-2009 global financial crisis, central banks became more strategically sensitive and agile about the architecture of their financial systems. They became more alert to recognise changes in the global financial landscape and act more swiftly as appropriate to forestall undesirable consequences.
Central Bank of Nigeria, CBN, places financial system stability on the front burner. The Bank had developed a framework and tools for managing factors that create liquidity shocks with zero tolerance on practices that undermine the health of financial institutions.
Recently CBN prohibited deposit money banks, non-banking institutions and other institutions from facilitating trading and dealings in crypto currencies.
A crypto currency is digital money; a type of currency which uses digital file as money. It has “decentralised control” which implies that it is not controlled by one person or government.
There are more than 6000 different crypto currencies that are traded publicly. Some of the very notable ones include Bitcoin, Ethereum, ETH, Litecoin, TCC, Dash, Ripple and many others. The total value of crypto currencies as at February 2021 reportedly stood at $1.6 trillion. Crypto currencies are said to be in high demand because of ease of use. “All it takes is just to get a smart device, an internet connection and instantly you become your own bank, making payments and money transfers.”
According to a media report, “more cryptocurrency trading goes on in Nigeria than almost anywhere else in the world”, which is said to reflect a loss of faith in more traditional forms of investment. And that 32 per cent of Nigerians use cryptocurrencies, the highest proportion of any country in the world.
CBN Governor, Godwin Emefiele, notes that the prohibition was in the best interest of the financial system and depositors. According to Emefiele: “Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system.”
He further noted that cryptocurrency operation was opaque, unregulated and dangerous. And that it contravened an existing CBN Act (2007) which made CBN the issuer of legal tender in Nigeria, made it suitable for the perpetuation of illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.
CBN is not alone in the prohibition of use of crypto currencies. China also banned the use of crypto currency. Other countries that have followed suit include Morocco and Algeria where a breach attracts heavy fines. Other countries include Bolivia, Ecuador, Nepal, Macedonia and Bangladesh. But USA, Germany, France and Canada. Others include Malta, Holland, Singapore and India which legalised trading in crypto currency.
Aligning with CBN’s policy, some experts have also warned that cryptocurrencies may not be that safe and advised people to steer clear of them. They noted that, unlike the proper currency, cryptocurrencies lack stability, have price volatility, and expose investors to theft.
A notable billionaire investor, Warren Buffet, reportedly called cryptocurrency a “mirage” and noted that “it does not meet the test of a currency”. He added that “it is not a durable means of exchange, it’s not a store of value and I can say almost with certainty that they will come to a bad ending.”
Refineries Not Created To Reduce Petrol Price, Kyari Tells Senate
Forty eight hours after being summoned by the Senate, the Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, has now appeared before the joint committee on appropriations.
The Senate had issued a 24-hour ultimatum on Wednesday to the NNPCL boss after an observations that he had in previous occasions, shunned summons by the Senate to appear before its ad-committee probing over 11 trillion naira expenditure on turn around maintenance of refineries in the country between 2010 and 2023.
Responding to questions by the senate committee on appropriations on the potential drop in pump price of petroleum owing to the expected functionality of refineries, Kyari clarified his comment after he was interrogated again. He explained that it might be possible to have a reduction, but it is not the main objective of the refineries.
He buttressed that maintaining the energy security target has fostered the confidence that in 2024, Nigeria will become a net exporter of petroleum products.
The NNPCL boss affirmed that no subsidy is charged to the federation, adding that the NNPC has contributed 4.45 trillion naira as direct revenue into the federation in a combination of taxes, royalties and dividends and paid 406 billion naira as dividend to Federal Government’s account from July 2023.
According to him, Nigeria does not have credible data for PMS consumption in the country because of the absence of the instrument to measure.
The Chairman of the Senate Appropriation Committee, Senator Adeola Olamilekan, had on Wednesday, directed Kyari to appear before the committee in 24 hours.
Olamilekan, who asked Kyari to appear in company of the Executive Secretary of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), warned that failure to appear undermines the legislature and sabotages the process.
They are required to present the list of all individual companies operating with OML licenses in Nigeria as well as total production output approved on a daily basis.
The lawmaker expressed concerns that some of the revenues required to drive the 2024 budget was attributed to the NNPCL, which according to him, was owned by the Federal Government and responsible to it, and by extension the three arms of government. Channels TV.
Labour Leaders Meet To Work Out Living Wages
Ahead of the expected resumption of negotiation between the Federal Government and the organised labour on the new Minimum Wage, the Nigeria Labour Congress, NLC, is meeting in Abuja to brainstorm so as to arrive at a living wage that is commensurate with the prevailing cost of living.
This came as the NLC has vowed not to be deterred by the recent assault on workers and their leaders in Imo State, which it said poses a grave threat to freedom of association and collective bargaining as enshrined in the 1999 Constitution of the Federal Republic of Nigeria as amended and the ILO Conventions 87 and 98 on Freedom of Association and Collective Bargaining.
These were contained in the welcome address by the NLC President, Mr. Joe Ajaero, at the Opening Session of the NLC 2023 Harmattan School with the theme: “Building Workers’ Skills for Policy Engagement” in Abuja.
Ajaero, represented by the Congress Deputy President, Benjamin Anthony said: “In the face of adversity and brutality encountered while advocating for the rights of workers to earn their legitimate income and benefits, our resolve remains unwavering. We are motivated to continue our efforts towards achieving decent work and improving working conditions in the formal and informal sectors of the economy.
“The recent assault on workers and their leaders in Imo State poses a grave threat to freedom of association and collective bargaining as enshrined in Section 40 of the 1999 Constitution of the Federal Republic of Nigeria as amended and the ILO Conventions 87 and 98 on Freedom of Association and Collective Bargaining, and should unequivocally be condemned by all people of goodwill.
“The only thing that can assuage our pains is for the Imo State Government to address all labour issues and return the so called ‘ghost workers’ to their jobs, pay all outstanding salaries and pensions and call back all victimized workers to their jobs.
“It has become very necessary for governments at all levels to recognize that life and living conditions are exceedingly difficult, especially for working people in both the formal and informal sectors of the economy.”
“The removal of subsidy on petroleum products has further exacerbated the challenges faced by working people, unleashing severe pain and contributing to galloping inflation and increasing inequality and poverty.
“We must reckon that a well-motivated and well-remunerated workforce has a positive impact on productivity and national development,” he added.
He implored participants to approach the training programme with a quest and thirst for knowledge through asking of questions and sharing of experiences with the facilitators and with one another.
He thanked the representative of the Minister of Labour and Employment, the Country Director of the ILO for the English Speaking, West African Countries, the Director General of the Nigeria Employers’ Consultative Association, NECA, the Resident Representative of the Friedrich Ebert Stiftung, FES, Country Director of the Solidarity Centre, members of the NAC, CWC and NEC of the NLC for finding time to attend the Opening Session of the 2023 School.
Operatives Of NDLEA Uncover Illicit Drugs Concealed In Dolls, Local Soap, Milo Tins
Operatives of the National Drug Law Enforcement Agency (NDLEA) have uncovered illicit substances bound for Europe, United Arab Emirates and Asia.
Disclosing this in a statement on Sunday, NDLEA spokesman, Femi Babafemi, said the illicit substances intercepted included various quantities of methamphetamine and opioids concealed in hems of new jeans trousers, dolls, buttons, local soap and tins of milo beverage.
Noting that the operation was carried out by operatives of the Directorate of Operations and General Investigation (DOGI) at courier houses in Lagos, he said some of the items seized included tramadol 225mg concealed in hems of new jeans trousers heading to Cyprus; shipment of cannabis sativa hidden in heads of dolls going to Dubai; sachets of tramadol 225mg buried in tins of milo beverage going to UAE; and another set of same drug hidden in local soap also going to UAE.
Others were a consignment of methamphetamine concealed in buttons heading to Hong Kong; and a shipment of another illicit substance coming from Florida, USA.
“Operatives in Lagos on Friday 1st December also arrested a drug kingpin, Okechukwu Ogala, 56, who specialises in exploiting and recruiting young citizens to export meth to Asian countries.
“He was arrested at Blue Moon Hotel in Okota area of Lagos with 60 wraps of methamphetamine weighing 1.009 kilograms.
“In another operation in Lagos, operatives on Friday 1st December recovered 393kgs of cannabis in a shop at Akala, Mushin while a suspect, Justin Enuonye, who deals in Canadian Loud was arrested by the police at Victoria Island and transferred to Lagos Command of NDLEA on Friday 1st December with 154 parcels weighing 92kgs.
“A team of NDLEA operatives also intercepted a vehicle at Oyingbo area of Lagos and recovered 108kgs of cannabis from it, while 675 kilograms of the same substance were recovered from the store of a wanted dealer, Wahab Olota at Adedoja area of Mushin, Lagos,” Babafemi said. Channels TV.
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