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CBN Launches Nigeria FX Code to Ensure Market Transparency, Ethical Practices

CBN Governor Cardoso has launched the Nigeria FX Code to enforce ethical practices, transparency, and governance in the FX market.

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, on Tuesday 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.

“Self-regulation and conduct are at the core of the changes in culture we expect to see at play in the industry, and I expect the principles of the FX Code to be applied across other business areas.”

Cardoso further pointed out that the FX market was hitherto marked by an era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, and severely undermined market integrity.

He referenced the $7 billion FX backlogs which according to him, had taken over 12 months to verify, adding that the process had nevertheless, led to the discovery of multiple unethical and illegal practices that “we should not be proud of as a nation”.

Similarly, Cardoso said the period of unprecedented ways-and-means-financing inflicted significant damage on the economy, contributing to inflation, currency depreciation, and eroded public confidence, noting that “These practices must never return”.

He further acknowledged that the journey towards market reform was already yielding results, noting that 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.

He said reforms including discontinuation of quasi-fiscal interventions, unifying the exchange rate windows, clearing a backlog of foreign exchange commitments, and recalibrating monetary policy tools – were all necessary to redirect the course of the economy, restore order and credibility to FX market, and refocus the CBN on its core mandates.

Specifically, he noted that the introduction of the Electronic Foreign Exchange Matching System. (EFEMS) in December 2024 had improved market transparency and efficiency, pointing out that the Naira had appreciated significantly-from N1,663.90 on December 2, 2024, to N1,536.72 as of January 27, 2025.

He said by fostering exchange rate stability, the CBN is currently tackling inflation which remains a critical challenge as rising prices erode purchasing power and increase the cost of living.

He also said the effectiveness of reforms aimed at paying off legacy FX obligations and growing reserves organically, had helped the country’s external reserves to grow by 12.74 per cent, reaching $40.68 billion at the end of 2024 – the highest accretion in three years.

Cardoso said, “All these indicators of progress are the direct result of our commitment to reform and the collective efforts of all stakeholders.”

Cardoso specifically urged the bank CEOs to commit to the code and “do everything possible to protect it”.

He said, “If it doesn’t work, don’t blame anybody. We blame ourselves. Nobody to blame. We have ourselves to blame.”

He also charged the compliance departments of banks and the CBN to play their parts, and do their job without fear or favour.

He said, “You are part and parcel of this journey. You are part and parcel of this journey. Why did we decide to invite you? We could have invited somebody else. We could have left it at the CEOs alone. But you are a very critical element in this journey moving forward. And we expect you to do your jobs without fear or favour.

In his remarks, 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.

Alawuba stressed that from policy innovations to strategic interventions, the CBN had proven to be the cornerstone of the country’s economic stability.

He said the introduction of the FX code remained yet another bold and visionary step which not only complements other notable reforms of the CBN but also sets a new benchmark for accountability and integrity in the FX market.

The UBA GMD pointed out that by embedding global best practices and fostering a culture of trust and equity, the code will enhance market efficiency, attract greater participation, and elevate Nigeria’s standing in the global financial landscape.

He described the launch as a call to action for all stakeholders to uphold the principles of fairness, ethical behaviour, and professionalism.

He said, “The strength of any financial market lies in the integrity of its participants, and with the Nigeria FX Code, we now have a unified platform to reinforce this commitment.

“As we witness the ceremonial signing of this Code today, let it engender a reawakening of our collective responsibility to safeguarding the credibility of our FX market.

“Together, we can ensure that this market becomes a beacon of excellence, one that inspires confidence both locally and globally.”

He also expressed optimism that the initiative will usher a new era of transparency, trust, and progress for Nigeria’s FX market and the economy at large.

James Emejo

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