Nigeria: Publication of Financial Sector Assessment Program Documentation––Technical Note on Strengthening Monetary and Liquidity Management

IMF Staff Country Reports, October 24, 2013

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Canonical URL: Nigeria: Publication of Financial Sector Assessment Program Documentation––Technical Note on Strengthening Monetary and Liquidity Management

This Technical Note focuses on strengthening of monetary and liquidity management in Nigeria.
The Central Bank of Nigeria (CBN) has robust institutional framework in place to design and implement monetary policy.
The CBN has also sufficient instruments for short-term liquidity management.
The Monetary Policy Rate (MPR) corridor serves as a signaling device for the monetary policy stance.
Although use of the overnight facilities is at the banks’ discretion, the CBN is able to use repo operations and outright transactions to manage day-to-day liquidity and guide short-term interest rates toward the MPR.

Institutional assessment: CBN possesses a robust institutional framework for monetary policy design and implementation.
Liquidity instruments: Sufficient instruments exist for short-term liquidity management, including overnight facilities (bank-discretionary), repo operations, and outright transactions.
Policy signaling: The Monetary Policy Rate (MPR) corridor is used as a signaling device for the monetary policy stance.

Overnight facilities: Use is at banks’ discretion.
Open market operations: The CBN uses repo operations and outright transactions to manage day-to-day liquidity and guide short-term interest rates toward the MPR.

Subjects: Asset and liability management, Banking, Currency markets, Financial markets, Foreign exchange, Foreign exchange sales, Liquidity, Liquidity forecasting, Liquidity management.
Keywords: bank, CBN bill, CBN concern, CBN need, CBN transaction, CR, Currency markets, Foreign exchange sales, interest rate, intervention policy, ISCR, Liquidity, Liquidity forecasting, Liquidity management, market, market participant, rate.