The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, yesterday launched the Nigeria Foreign Exchange Code (FX Code), aimed at sanitising market practices, and entrenching good governance. The CBN governor said the code was a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in the FX market, adding that violations will be met with penalties and administrative actions.
He stressed that exchange rate stability remained a cornerstone of macroeconomic health for the Nigerian economy, influencing critical indicators such as the balance of payments, external reserves, international trade, inflation, economic growth, and foreign investment.
Speaking at the launch of the code, alongside chief executives of Deposit Money Banks (DMBs) who took their turns to sign the framework as a mark of commitment to ensuring compliance, Cardoso further hinted that the forensic audit of the $7 billion FX backlogs which he inherited on assumption of office, was near conclusion, adding that final settlements of genuine FX liabilities to investors would be processed accordingly.
This is as Group Managing Director/Chief Executive, United Bank for Africa (UBA) Plc, Mr. Oliver Alawuba, commended the CBN for its steadfast leadership and impactful reforms championed in recent years.
He said these initiatives have been pivotal in stabilisng the FX market, restoring investor confidence, and ensuring a more sustainable and resilient financial system.
However, the central bank governor stressed that the code remained a firm signal that business-as-usual will no longer be entertained, and describing it as a blueprint for the future, grounded in the hard lessons of the past, adding “We must not forget where we are coming from”.
He said the code was a firm rejection of previous distortions in the market and an equally firm commitment to a future defined by fairness, trust and market-driven principles.
The governor warned that the central bank would not tolerate any attempts to revert to past unethical practices, adding that any individual or institution that violates the FX code will face swift and decisive sanctions.
He added that the CBN will not hesitate to act against any institution or individual that undermines the integrity of the country’s financial markets, adding that the code remains a binding commitment to accountability and transparency.
He said, “Let us be clear; the system itself played a key role in the challenges of the past. Unethical behaviours and systemic abuses – whether by those with privileged access or by complicit participants eroded public trust and harmed our economy.
“Our journey towards market reform is already yielding results. The year 2024 was marked by structural reforms which sought to return the naira to a freely determined market price and ease volatility as several distortions were removed from the market.”
The FX code consists six guiding principles and 52 sub-principles, which Cardoso said must become the standard for conduct across all participating institutions.
The core principles include ethics, governance, execution, information sharing, risk management and compliance, and confirmation and settlement processes. Cardoso also stated that these principles aligned with international standards while addressing Nigeria’s unique challenges.
He said together, they provide the foundation for a resilient and transparent market that inspires confidence among both domestic and international participants.
The apex bank boss, therefore, charged banking industry leaders, including board chairs, managing directors, and chief compliance officers, to lead from the front, noting that embedding these standards are not optional in their respective organisations.
Essentially, the CBN governor said the introduction of the code marked a new era of compliance and accountability.
He said, “It is not just a set of recommendations; this is an enforceable framework. Under CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions. Market participants must recognise that adherence to these principles is not merely about compliance but about restoring public trust in our financial system.
“Beyond the foreign exchange markets, the FX code forms part of our renewed focus on compliance across the financial services industry and I am particularly pleased that we have the leadership of the industry in this room to reinforce a collective commitment to the journey ahead.
