The Central Bank of Nigeria (CBN) has introduced the Nigeria Foreign Exchange (FX) Code as part of its efforts to address risks associated with the significant positive changes in the nation’s financial environment.
Naija News reports that the apex bank announced this on Monday, January 27, stating that the Code is based on the principles outlined in the Global FX Code and incorporates best practices from leading financial jurisdictions.
Over the years, Nigeria’s financial sector has experienced substantial and beneficial changes; however, certain risks remain evident.
The apex bank emphasized that the FX Code was developed in response to these changes, aiming to establish standards that will comprehensively enhance and uphold the integrity and efficient operation of the wholesale foreign exchange (FX) market in Nigeria.
“It will facilitate better market functioning, further reinforcing Nigeria’s flexible exchange rate regime.
“The FX Code is expected to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infrastructure, can confidently and effectively transact at competitive prices that reflect available market information in a manner that conforms to acceptable global behavioural standards and best practices.
“The FX Code applies to Market Participants.
“These are Authorised Dealers licensed by the CBN under the CBN Act 2007, and the Bank and Other Financial Institutions Act (BOFIA) 2020 and other participants that engage in the wholesale foreign exchange business in Nigeria as part of their licensed business,” the CBN noted in its announcement.
The central bank has indicated that the Foreign Exchange Code is organized around six fundamental principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.
CBN added: “In addition, some principles were incorporated in the Nigerian FX Code to promote efficiency in the Nigeria FX market.
“The FX Code requires Market Participants to ensure that illegal financial transfers are avoided, and appropriate money laundering policies put in place to protect the integrity of the domestic markets and the global financial framework as a whole.
“In the context of the FX Code, the term ‘Market Participant’ is generally used to refer to banks, personnel, and other approved institutions.
“In some cases, it will be clear that a principle is by its nature more relevant to only one or the other. For example, certain principles deal primarily with business or bank-level policies and procedures rather than individual behaviours.
“The terms “banks” and “personnel” are occasionally used where principles focus on good practice by banks with regard to personnel in their capacity as such, and vice versa.”
The post CBN Unveils Nigeria FX Code To Address Financial Risks appeared first on Naija News.