The Central Bank of Nigeria (CBN) has implemented significant adjustments to its monetary policy stance, including a notable increase in the Monetary Policy Rate (MPR), which now stands at 24.75%, marking a 200 basis points rise from the previous rate of 22.75% set in February.

This decision was announced by Central Bank Governor, Mr. Olayemi Cardoso, following the conclusion of the Monetary Policy Committee (MPC) meeting on Tuesday.

While the MPR saw a substantial hike, the CBN opted to maintain the Cash Reserve Ratio (CRR) for commercial banks at 45%. However, the CRR for merchant banks was adjusted upward from 10% to 14%. Additionally, the liquidity ratio of banks remains unchanged at 30%.

In a significant change to its policy framework, the CBN also modified the asymmetric corridor from +100/-700 to +100/-300 around the MPR. This adjustment aims to provide greater flexibility in monetary policy implementation while maintaining price stability.

Reacting to the decision, financial analysts expressed mixed views on its potential impact on the economy. While some welcomed the move as necessary to curb inflationary pressures, others raised concerns about its potential adverse effects on small and medium-sized enterprises (SMEs) and overall economic growth.

“As inflation is up the CBN has raised rates as expected. However, raising interest rates kills the local economy. The question today is how much economic growth can be sacrificed to reduce inflation,” Kalu Aja said.

Many economists have urged the central bank to lower interest rates, cautioning that further increases could exacerbate the slowdown in economic activities. They argue that high interest rates could constrain borrowing and investment, stifling economic growth and job creation.

The decision to hike interest rates occurred against the backdrop of a surge in broad money supply in Nigeria. As of February 2024, Nigeria’s broad money supply (M3) reached a historic high of N95.56 trillion, marking a staggering 79.29% increase from the previous year. This surge reflects a substantial year-on-year growth of N42.26 trillion and a 1.96% increase from the preceding month of January 2024 and has been fingered as a contributor to inflation.

In addition to the surge in broad money supply, Nigeria’s Money Supply (M2) also reached a historical high of N93.9 trillion in February, up from the previous record of N92.8 trillion established in January 2024. These developments denote the significant liquidity in the Nigerian economy, posing challenges for monetary policy management.

The trajectory of the broad money supply (M3) in Nigeria underscores its considerable upward momentum in recent years and reflects a key measure of economic liquidity. This metric includes both net foreign assets and net domestic assets and provides a comprehensive overview of the country’s monetary dynamics.

Ms. Emem Usoro, CBN Deputy Governor of the Operations Directorate, highlighted the correlation between broad money supply and inflation during the MPC meeting in January, noting that both have moved almost in tandem.

“Notably, broad money and inflation have moved almost in tandem as broad money supply (M3) expanded by 18.25% at the end of January 2024. This growth was ascribed to a rise in other deposits, transferable deposits, and securities other than shares, by 26.55%, 4.73%, and 99.98%, respectively.

“From the asset side, Net Domestic Asset (NDA) contributed significantly to broad money growth while Net Foreign Asset (NFA) subdued growth in broad money. The steady rise in inflation has resulted in negative real interest rates,” she said.

Meanwhile, the CBN has directed deposit money banks in the country to expedite actions to increase their capital base. Cardoso emphasized the importance of strengthening the financial system against potential risks, urging banks to accelerate their recapitalization efforts.

He said although the MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable, there is a need for the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalization of banks to strengthen the system against potential risks in an increasingly globalized world,” he said.

It would be recalled that in November 2023, at the 58th Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), Cardoso announced the CBN’s intention to embark on a new round of bank recapitalization for Deposit Money Banks (DMBs).

Addressing the Policy Advisory Council on the National Economy, Cardoso highlighted President Bola Ahmed Tinubu’s ambitious target of achieving a Gross Domestic Product (GDP) of $1 trillion by 2030. This target underscores the government’s commitment to drive economic growth and development over the next decade.

Cardoso emphasized the need to recapitalize the banks so that they can play their role in developing Nigeria’s economic growth over the next seven years.

Diamond Bank gave us some books to read in the training school, as the bank turned engineers, accountants, pharmacists, linguists, etc, into bankers. And by the time we completed the 3-month Diamond Bank training program, we understood money, capital and banking. One of those books is The Richest Man in Babylon. If you read that, among others, you will get one message: it makes sense to use experts on things you know nothing about.

Yes, like him, hate him, but if your desire is to add more digits in the bank account, Donald Trump is the deal. Did you know that he has just added about $4.5 billion through his own social media ecosystem, Truth Social: “Shares of Donald Trump’s social-media company surged 16% on their first day of trading, boosting the presidential candidate’s fortune… [to] roughly $4.5 billion”.

Legends – anywhere they go, they find how to extract value. Today, Donald Trump is about to be rewarded with $3 billion for Truth Social: “Shareholders voted to approve Trump Media’s merger with a blank-check company, following years of legal and regulatory obstacles. Trump will own a dominant stake in a public company, with shares worth more than $3 billion at current market prices.”

We rant here, post day and night, but one businessman with deal sagacity has created a $3 billion fortune in less than 4 years from social media!

People, respect those who sabi. Trump knows how to make money! From banning him from Twitter and Facebook to him becoming platform-less, the man figured out how to pick $4.5 billion on the way. You would then ask: if they had not banned him, would these $billions have been unlocked by him? People, do not make your best customer take revenge against you! Simply, Truth Social and the Trump media empire are now vectors in the world of Twitter, Facebook, etc.

That said, Trump is not my type of politician; I will not ask him to teach me politics, despite his results, but when it comes to making money, he has my respect for his financial deal sagacity!

Shares of Donald Trump’s social media company rose about 16% in the first day of trading on the Nasdaq, boosting the value of Trump’s large stake in the company as well as the smaller holdings of fans who purchased shares as a show of support for the former president.

Trump Media & Technology Group Corp. merged Monday with a blank-check company called Digital World Acquisition Corp. Trump Media, which runs the social media platform Truth Social, has now taken Digital World’s place on the Nasdaq stock exchange.

Shares closed at $57.99, up 16.1%, giving the company a market value of $7.85 billion. At one point the stock was up about 59%. Trump holds a nearly 60% ownership stake in the company, now worth about $4.6 billion.

Diamond Bank gave us some books to read in the training school, as the bank turned engineers, accountants, pharmacists, linguists, etc, into bankers. And by the time we completed the 3-month Diamond Bank training program, we understood money, capital and banking. One of those… pic.twitter.com/4aP4P61cwj

— Ndubuisi Ekekwe (@ndekekwe) March 26, 2024

The European Union’s markets watchdog has recently advanced in its efforts to finalize the comprehensive set of rules under the Markets in Crypto-Assets (MiCA) regulatory framework. This development is a critical step towards establishing a harmonized regulatory landscape for crypto assets across EU member states. The MiCA framework is designed to offer clear guidelines and robust protections for investors, while simultaneously ensuring that the rapidly evolving crypto market is subject to consistent oversight and regulation.

In-depth details of the proposed regulations reveal a focus on transparency, consumer protection, and anti-money laundering measures. The framework also addresses the need for standardized practices across various crypto-asset categories, including stablecoins and utility tokens. As these regulations approach their final form, they are expected to influence global standards for crypto-assets and highlight the EU’s dedication to balancing market innovation with financial safety and stability.

Under the forthcoming Markets in Crypto-Assets (MiCA) regulations, crypto exchanges in the European Union will be subject to a comprehensive set of security measures designed to protect both the exchanges and their users. These measures include mandatory multi-factor authentication for user accounts, encrypted storage of customer data, regular security audits, and the implementation of anti-fraud systems to detect and prevent unauthorized transactions.

Additionally, crypto exchanges will need to establish clear procedures for responding to security breaches, including timely notification to authorities and affected users. The MiCA framework also emphasizes the importance of maintaining adequate reserves and contingency plans to address potential financial losses from security incidents. These enhanced security protocols are intended to create a safer trading environment and increase trust among users in the digital asset marketplace.

The MiCA regulations are set to introduce a more transparent and secure investment environment for crypto assets, providing investors with clearer guidelines and protections. This includes measures to safeguard against fraud, market manipulation, and financial losses due to operational failures of crypto-asset service providers.

For investors, this translates into a more reliable market with standardized rules and practices, reducing the risks associated with investing in crypto assets. The framework also aims to foster investor confidence by ensuring that crypto-asset issuers and service providers adhere to strict operational standards and disclosure requirements. As a result, investors can expect a level of stability and security in their crypto-asset investments that was previously lacking, potentially leading to greater participation in the market and promoting overall market growth.

The impending completion of the Markets in Crypto-Assets (MiCA) regulatory framework by the European Union’s markets watchdog is set to significantly influence crypto exchanges operating within the EU. These regulations will mandate crypto exchanges to implement stringent operational standards, including robust security measures, transparent pricing mechanisms, and comprehensive customer due diligence procedures.

Crypto exchanges will be required to obtain necessary licenses and adhere to strict reporting and compliance requirements, ensuring a high level of accountability and transparency. This is expected to lead to a consolidation of the market, with only those exchanges that can meet these rigorous standards continuing to operate. For crypto exchanges, this means an increase in operational costs but also an opportunity to establish themselves as reputable and reliable platforms that attract a broader base of users seeking secure and regulated trading environments.