The Central Bank of Nigeria defended its 75% cash reserve rule on public deposits to control inflation and manage money supply.
The Central Bank of Nigeria has come forward to strongly defend its major monetary policy decision requiring commercial banks to keep 75% of all public sector deposits that do not belong to the Treasury Single Account locked away in reserve.
The financial regulatory authority explained that this strict rule was put in place to control the heavy circulation of money in the country and fight the rising cost of goods and services that affects ordinary citizens every day.
The policy explanation was given by the bank’s Director of Stakeholder Engagement and Institutional Relations, Hakama Sidi-Ali, while speaking to business leaders, traders, and citizens during a special interactive program held in Ibadan, Oyo State, on Thursday.
The central monetary authority introduced the 75% cash reserve ratio rule during its high-level policy meetings to regulate how commercial banks handle government money deposited in their vaults.
Banking experts point out that the cash reserve ratio is the portion of customer funds that commercial banks must keep safely with the apex bank instead of lending out to business borrowers or investing in other commercial projects.
Explaining why the regulatory bank decided to enforce this strict policy on public sector funds kept in regular commercial banks, the official detailed the main goals behind the decision.
Shedding light on how the policy helps protect the economy and reduce price increases across local markets, Hakama Sidi-Ali stated that the measure was part of “the implementation of a 75% Cash Reserve Ratio on non-Treasury Single Account public sector deposits as part of the Bank’s efforts to improve liquidity management and mitigate inflationary pressures in the economy.”
The bank’s leadership noted that under the guidance of Governor Olayemi Cardoso, the institution has continued to introduce bold financial sector reforms aimed at cleaning up the economy and building trust in the financial markets.
Describing other measures taken by the apex bank to stabilize the foreign exchange market and make currency trading more open and transparent, the bank official highlighted recent digital trading platforms introduced for banks.
Speaking on the importance of listening to ordinary people and business owners through public engagement sessions, the director emphasized that the bank values feedback from citizens to improve its future rules.
Highlighting the need for open communication between the regulatory bank and the public, Hakama Sidi-Ali noted: “The Central Bank of Nigeria values your diverse perspectives, experiences, concerns, and recommendations. Your contributions today will help shape future engagements and strengthen the effectiveness of our policy interventions.”
Business owners and market traders across the country have continued to share mixed views on how these strict monetary rules affect bank loans and business growth in local communities.
Economic analysts are watching closely to see how these banking regulations will shape market prices in the coming months.
Jennifer Baba is a journalist, international news correspondent, and writer at Moderncrux, where she covers artificial intelligence, fintech, emerging technologies, global politics, and international affairs. Based in Nigeria, she is passionate about transforming complex global developments into clear, engaging stories that inform and inspire readers.
