CBN says ceases to be lender of last resort in payment system

Central Bank of Nigeria (CBN) says it will cease its implicit role of being lender of last resort to the payment system, in a move to address the settlement risks in the payments system in line with the national payments system strategy. Godwin Emefiele, CBN governor, said this on the sideline of the 10th annual banking and finance conference organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja.

Concerned with the growing menace of cyber crime and electronic payments fraud in the payments industry, Emefiele said the CBN was collaborating with law enforcement agencies to set up a Dedicated Electronic Payments and Card Crime Unit in the Nigeria Police.

Furthermore, consultations are ongoing for the establishment of an industry fraud risk intelligence bureau and a Security Operations Centre (SOC), Emefiele said.

The CBN is facilitating the articulation of the framework for the adoption of “survivor pays” collateral management model in line with the BIS/IOSCO Principles for Financial Market Infrastructure (PFMI), he said.

“Nigeria is clear in its objective of being “internationally recognised” for its compliance with international best practice and standards, hence the payments infrastructure is subjected to annual PFMI compliance review,” he said at the conference.

While acknowledging that the speed of payments system innovations and innovators is challenging, he said Nigeria would had to manage the trade-off between innovation and risks to engender disruptive innovation with positive benefits of inclusiveness.

“We must continue to study development and enhance our regulations, without being excessively prohibitive. The national payments system in Nigeria must continue to reinvent itself to facilitate economic activities, through safe and efficient systems, which in turn, will extend availability and encourage usage across sectors and geographies, banked and unbanked, while conforming to international standards,” the CBN governor said.

In his welcome address, Segun Ajibola, president/chairman in council, CIBN, said the time was now for the banks to join hands in promoting financial inclusion policies and programmes, as enunciated from time to time.

“I believe this is the time the financial services sector needs to play some catalytic roles to redirect the economy to path of recovery, growth and development,” Ajibola said.

This year’s theme, ‘Innovations in the Financial Services Sector: Driving Nigeria’s New Economy,’ has been crafted to x-ray the roles the sector must play towards a quick recovery of the economy, he said.