CBN TO IMPLEMENT NEW BASEL ACCORD
Eager to consolidate and achieve a robust banking industry through reforms, the Central Bank of Nigeria (CBN) has hinted that it would engage specialists to drive the implementation of the Basel II and III, as well as other key initiatives aimed at enhancing effective banking supervision.
According to the Governor of Central Bank, Mallam Sanusi Lamido Sanusi, who spoke at the opening ceremony of the 2011 National Seminar on Banking and Allied Matters for Judges, organized by the Chartered Institute of Bankers of Nigeria (CIBN) in collaboration with the National Judicial Institute, the banking supervision Accords are targeted at broader macro-economic stability and improve the safety and soundness of the banking system, stressing that there is need to guide against the eruption of future crisis in the industry.
Besides, he noted that the recent banking crisis occasioned by huge concentration of credit portfolios in the oil and gas sector, the capital market and also being that the financial system, provides the anchor for the development of the various sectors of the economy through high levels of specialization, expertise, economies of scale and a conducive environment, these call for the implementation of various policies intended to stimulate growth.
However, he highlighted the importance of banking reforms to be for effective risk management processes; enhanced corporate governance practices; adequate consumer protection; enhanced macro-prudential framework; effective banking crisis resolution framework; guarantee of central bank independence; and establishment of independent banking oversight.
According to him, the resulting financial deepening reinforces public confidence, which represents banks' greatest asset and enhances the ability of financial institutions to effectively mobilize savings for investment purposes. Improved services lead to cost-reduction both for banks and consumers of banking services.
This in turn promotes aggregate demand which leads to output growth, employment generation and consequently, poverty reduction.
The CBN helmsman, who also canvassed for absolute independence of the apex bank, urged the National Assembly to continue to take steps to strengthen the operational and financial independence of the Central Bank of Nigeria in order to safeguard the integrity of the financial system and ensure its stability.
He stated: 'A key imperative of financial system stability is the need for financial/budgetary independence for the central bank. The under-pinning for this is that in the event of a crisis, particularly one that is systemic in nature, the exercise of the lender-of-last resort function cannot await the outcome of parliamentary debate without unnecessarily exposing the financial system to the risk of collapse.'
Meanwhile, he further argued that banking sector reform alone is not a sufficient pre-condition for economic development, affirming that economic and financial reforms must be complemented by reforms in other sectors particularly the justice sector for greater effectiveness in improving private sector participation in economic activities and attaining the growth potential of the economy.
Sunusi tasked the judiciary on speedy dispensation of justice which will help realize the objectives of a stable, safe and sound financial sector, while avowing CBN's commitment to bequeath to Nigeria a banking sector that will act as a catalyst for economic development.