IMF: Stronger Naira Demand Could Lead to CRR Reduction, Ease Banking Liquidity
By Aboki Forex —
The International Monetary Fund (IMF) has stated that increased demand for the naira may pave the way for a gradual reduction in Nigeria’s high Cash Reserve Ratio (CRR). This move could ease liquidity constraints in the banking sector and improve monetary policy transmission over time.
Nigeria’s current CRR stands at 45 per cent for deposit money banks. The IMF noted that this rate remains among the highest in the world. The requirement forces commercial banks to keep a large share of their deposits with the Central Bank of Nigeria (CBN), limiting funds available for lending and other banking activities.
The IMF also stressed the need to strengthen the CBN’s operational framework. It called for better alignment of liquidity management operations with the central bank’s monetary policy objectives.