CBN Introduces New Instrument For Releasing Excess Minimum Cash Requirement

The Central Bank of Nigeria has introduced the ‘Special Bill’ as it targets increasing liquidity in the country’s financial market.

The apex bank in a circular dated December 1 said the new instrument would be used to release excess cash above the regulatory minimum Cash Reserve Requirement of the apex bank.

The lender had on November 30 disclosed that it approved the disbursement of cash reserves requirement through the issuance of the CBN Special Bill.

The Central bank said in the circular seen by THE WHISTLER that it “hereby announces the introduction of Special Bills as part of efforts to deepen the financial markets (FM) and avail the monetary authority with an additional liquidity management tool.”

The apex bank noted the bill would have a tenure of 90 days, adding that the zero coupon applicable yield at issuance would be determined by the CBN.

The lender also said the instrument would be tradable amongst banks, retail and institutional investors.

It added that the new bill would not be accepted for repurchase agreement transactions with the CBN and shall not be discountable at the CBN window.

The CBN pointed out that the instrument would qualify as liquid assets in the computation of liquidity ratio for deposit money banks.

“The CBN will continue to ensure optimal regulation of systemic liquidity and promote efficient financial markets in support of economic recovery and sustained growth,” the apex bank added.