*CBN Governor, Mr Godwin Emefiele
The National Co-operative Financing Agency of Nigeria (CFAN)on Tuesday described the Cash Reserve Ratio (CRR) increment by the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) as a bold and good move for the economy.
Mr Emmanuel Atama, the Executive Secretary of CFAN was reported to have told the News Agency of Nigeria on Tuesday, that the decision was a control measure to check inflation in the country. Atama also explained that the CBN usually used her instrument to create a balance in the economy.
He said, “Those are control measures. It was identified that there was excess liquid in the economy and when there is excess liquid, the CBN always uses her instruments to create a balance. We know that when there is too much money in the economy, it encourages inflation and you can see that inflation rate has also gone up. I think the CBN is just being proactive in getting things done,’’ he explained.
The executive secretary said the implication of the decision would be that banks would have less money to lend to businesses. According to him, you will discover that little will be left at their disposal to lend especially now that banks are not even lending to people.
“The implication for the common man is that banks will not have enough money for people to access to do their businesses.”
Recall that the Governor of Nigeria’s CBN, Mr Godwin Emefiele on January 24, 2020 announced that the MPC increased banks’ CRR from 22.5 per cent to 27.5 per cent. CRR is the share of a bank’s total deposit that is mandated by the CBN to be maintained with the latter in the form of liquid cash. CRR ensures that a part of the bank’s deposit is with the Central Bank and is secured.