Regulatory Alerts2009-07-21 | BSD/DIR/GEN/CIR/03/016Added · Updated
Revised Guideline for Repo Transactions and CBN Inter-Bank Guarantee
In light of market liquidity issues, the Central Bank of Nigeria has issued new guidelines for repo transactions and CBN inter-bank guarantee. Effective immediately, FGN bonds are eligible instruments for repo transactions at CBN with a 90-day tenor to create additional liquidity. The previous restriction on banks obtaining funds from CBN windows and simultaneously placing those funds in the inter-bank market has been lifted, allowing them to participate in repo transactions and place the proceeds in the market if desired. While the CBN still guarantees all inter-bank placements, the interest rate cap has been removed. These changes aim to inject additional liquidity into the system, deepen the inter-bank market, reduce interest rates, and better support economic growth.
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