The Senate, in a seismic shift poised to reshape Nigeria’s financial landscape, has unveiled new plans for the Central Bank of Nigeria (CBN), including extending the governor’s tenure to six years and proposing a massive N1 trillion recapitalization for commercial banks.
The proposed amendments, made known during a charged session, is to fortify the independence and efficacy of the CBN while modernizing its operations to meet the demands of a dynamic economy.
Under the proposed legislation, sponsored by Senator Adetokunbo Abiru, Chairman of the Senate Committee on Banking, Insurance, and other Financial Institutions, the CBN Governor, Deputy Governors, and Board of Directors would serve a single non-renewable term of six years.
“The bill proposes to amend this provision to provide a single non-renewal term of six years for the Governor and the Deputy Governors.
“This is the practice adopted by many independent banks such as the US Federal Reserve and the European Central Bank, where their Chief Executive Officers serve only one non-renewable term.
“Empirical evidence shows that a single term for the members of the Executive and Board members of central banks helps to reduce political influence on monetary policy decisions and the time inconsistency problem associated with non-independent central banks,” Abiru said in his lead argument.
Amidst these groundbreaking proposals, the Senate also seeks to establish a Coordinating Committee for Monetary and Fiscal Policies, addressing the critical need for synergy between monetary, fiscal, and trade policies to foster economic stability and growth.
Also, the bill seeks to regulate the issuance of Ways and Means by the CBN to the Federal Government, introducing safeguards to prevent abuse and minimize default risk.
