CBN Absorbs N4.48 Trillion in Liquidity Tightening Efforts
The Central Bank of Nigeria (CBN) has implemented a radical liquidity tightening strategy, absorbing a total of N4.48 trillion from the banking system over two sessions conducted between April 9 and April 14, 2023. This move is part of the CBN's efforts to sterilize excess funds in the banking sector.
Following these operations, the open balances of banks dropped significantly, with a decrease from N135.76 billion on April 14 to N99.05 billion on April 15. Despite this, there remains a substantial amount of cash parked in the CBN's Standing Deposit Facility (SDF), indicating a persistent liquidity overhang.
The CBN's actions underscore a deliberate strategy to manage liquidity without disrupting market stability, as the financial system continues to experience high levels of excess cash. The CBN aims to control this liquidity to support macroeconomic stability while ensuring that lenders prefer to park their funds safely rather than taking on additional risks.
Plus234Feed summary based on reporting from Nairametrics. Read the original report below.
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