The Central Bank of Nigeria (CBN) has defended its monetary and foreign exchange reforms before the Senate, insisting that the policies have strengthened macroeconomic stability, restored investor confidence and placed the economy on a firmer footing, even as lawmakers raised concerns over bank lending, inflation, recapitalisation and the apex bank’s financial operations.
At a statutory engagement with the Senate Committee on Banking, Insurance and Other Financial Institutions yesterday, lawmakers questioned the CBN on the impact of its banking reforms on credit to the real sector, the outlook for inflation, foreign exchange management, rising Open Market Operations (OMO) liabilities, excessive bank charges and consumer protection.
The session, chaired by Mukhail Adetokunbo Abiru, was held in line with the CBN Act, which requires the governor to brief the National Assembly twice yearly. It was the committee’s first engagement with the apex bank in 2026.
Leading the delegation, CBN Governor, Olayemi Cardoso, accompanied by the bank’s four deputy governors and other senior officials, said reforms implemented over the past three years had consolidated macroeconomic gains despite persistent global uncertainties.
“I am pleased to report that the first half of 2026 witnessed the consolidation of many of those gains,” Cardoso told lawmakers, citing improvements in inflation, exchange rate stability, external reserves and banking sector reforms.
He said although headline inflation rose temporarily from 15.06 percent in February to 15.93 percent in May due to geopolitical tensions in the Middle East, it moderated to 15.91 percent in June, demonstrating the effectiveness of the bank’s monetary policy.
Cardoso also said foreign exchange reforms had improved transparency, reduced speculative activities and strengthened investor confidence.
According to him, the average exchange rate appreciated to N1,375.40 per dollar in the first half of 2026, while diaspora remittances through official channels increased from about $200 million to over $600 million monthly, with the CBN targeting $1 billion monthly by the end of the year. He added that Nigeria’s external reserves had climbed to $52.73 billion as of July 9. On the banking sector, the CBN governor disclosed that banks raised N4.65 trillion in fresh capital under the recapitalisation programme, with 72.55 per cent coming from domestic investors and 27.45 percent from foreign investors.
Cardoso said 33 banks had met the new capital requirements, while discussions were ongoing with the few institutions yet to comply in order to protect depositors and maintain financial system stability. “With recapitalisation now completed, our focus has shifted towards ensuring that stronger capital translates into improved governance, enhanced risk management and support for productive economic activities,” he said.
Earlier, Abiru acknowledged improvements in macroeconomic indicators since the committee’s last engagement with the apex bank in December 2025 but maintained that the reforms must produce tangible benefits for businesses and ordinary Nigerians.
While commending the CBN for stabilising the foreign exchange market and successfully implementing bank recapitalisation, he cautioned that the exercise should not become an end in itself.
“Ultimately, the true measure of a stronger banking system lies not merely in larger balance sheets but in its capacity to mobilise savings efficiently and channel affordable credit to productive sectors of the economy,” he said.
Abiru noted that agriculture, manufacturing, infrastructure, technology and small and medium enterprises should be the major beneficiaries of the increased capital base of banks.
He expressed concern that private sector lending appeared to have moderated despite banks raising unprecedented levels of capital.
“The expectation of businesses and indeed the Nigerian people is that stronger capital positions should naturally support increased lending to the economy rather than concentration in risk-free assets or short-term financial instruments,” he added.
The committee also sought explanations on banks yet to meet recapitalisation requirements, excessive bank charges, failed electronic transactions, cybersecurity, financial inclusion, the circulation of quality Naira notes and the proposed regulatory framework for financial holding companies.
Lawmakers further scrutinised the CBN’s 2025 audited financial statements, seeking clarification on the sharp increase in liquidity sterilisation through Open Market Operations, which reportedly rose from N24.3 trillion in 2024 to N48.7 trillion in 2025.
They also requested details on the associated liquidity management costs, increased operating expenses and the treatment of the bank’s operating surplus through the offset of the Federal Government’s Ways and Means advances rather than cash remittance, saying the issues have implications for fiscal transparency and legislative oversight.
After the public session, the committee proceeded into a closed-door meeting with Cardoso and his management team for further engagement on the issues raised.
