Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), stated that the apex bank’s decision to implement the electronic foreign exchange matching system (EFEMS) demonstrates its commitment to fair and efficient markets.
Cardoso made these remarks while addressing members of the Harvard Club of Nigeria in Lagos over the weekend.
On October 3, the apex bank announced the introduction of the FX matching system.
During the event, Cardoso reiterated that the CBN’s move was aimed at enhancing transparency and providing more accurate oversight of FX transactions.
“Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminishes. Our decision to implement the Electronic Foreign Exchange Matching System (EFEMS) is rooted in this understanding,” he said.
“By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets.”
According to Cardoso, being a leader—especially as the governor of a central bank—often requires making tough and occasionally unpleasant choices.
He emphasised that the bank is a listening institution and is not afraid to reconsider decisions if they fail to meet their original objectives.
“In the face of economic challenges, it is imperative to focus on core objectives—restoring the credibility of the institution, building trust in the financial system, and, most critically, containing inflation,” he said.
“These are not just strategic goals; they are foundational to any meaningful recovery.”
Reflecting on his journey as the apex bank governor, Cardoso noted that when he assumed office, he understood that the credibility of the CBN had to be the foundation of the actions taken by him and his team.
“Without credibility, no policy, however well-intentioned, can succeed. Floating the naira, a decision met with considerable public criticism, was necessary to bring the official exchange rate closer to market reality,” Cardoso said.
“The disparity between the official and parallel rates had encouraged arbitrage and speculation, eroding trust in the market.
“Credibility is earned by consistency. The decision to close this gap, while painful in the short term, sent a message to market participants that the CBN was committed to transparency and sound monetary policy.”
He added that speculative trading had been reduced and stability was gradually returning to the currency markets.
Cardoso mentioned that curbing inflation remained the CBN’s core mission, acknowledging that the apex bank had yet to meet its target.
However, he pointed out that recent declines reported by the National Bureau of Statistics (NBS) in July and August 2024 indicated that the CBN was moving in the right direction.
“Our decision to raise the Monetary Policy Rate (MPR) to 27.25% was a bold move. Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation,” he said.
“Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these.
“Leading through challenging times means avoiding the temptation to take on too many initiatives.
“The Central Bank must focus on its core mandate—price stability. It is easy to become distracted by various political and economic pressures, but as a leader, one must prioritise.”
Effective communication, Cardoso said, is as important as the right policy, adding that clear and transparent communication builds trust.
“From publishing the results of the Dutch Auction to ensuring regular updates on economic data, transparency has been our guiding principle,” he said.
Cardoso concluded by stating that trust is built on the belief that a central bank will take the necessary steps to maintain economic stability—even when those steps are uncomfortable or politically contentious.
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