CBN scrutinizes Brexit risks on Nigeria

cbnThe Central Bank of Nigeria (CBN) said it is examining the potential and future risks of the recent exit of the United Kingdom from the European Union.

The UK had a few days ago exited the EU following the results of a referendum it conducted.

The Deputy Governor, Economic Policy, CBN, Dr. Sarah Alade said the central bank was monitoring the Brexit development but noted that the perspective of the risks facing Nigeria’s financial system as a result of the situation was a welcome development.

She spoke in Lagos at a one-day breakfast session focusing on the implications of Brexit on the Nigerian banking industry.

The forum was organised by the Centre for Financial Studies, an arm of the Chartered Institute of Bankers of Nigeria.

Alade, who was represented at the event by the Director, Monetary Policy, CBN, Mr. Moses Tule, said, “At the CBN, we are trying to dimension what the risk areas are. Certainly, we will very much like to key into any new developments either seminars or symposia that may be organised on this area in the country.”

She added, “But in the meantime, as the European Union itself is trying to dimension what the risks are, we are doing the same thing here because it’s a volatile situation. The Brexit is not going to be as chaotic as the 2008 global crisis but it presents opportunities and losers.”

The President/Chairman of Council, CIBN, Professor Segun Ajibola, remarked that Brexit would impact trade agreements, global economic union, currencies and exchange rate regimes.

He said: “For Nigerian banks, it throws open a number of pressing issues such as lending and borrowing relationship, entered into under the aegis of Europe, correspondence banking relationship, entered into on the strength of Europe, and its impact on bank customers whose deposits and assets are in affected currencies.

“It also throws up issues such as treatment to be given to the differentials in currency values in the books of banks under the International Financial Reporting System.”

The Chief Executive Officer, Proshare Nigeria Limited, Mr. Femi Awoyemi, said that the Federal Government and financial institutions needed an extensive analysis and recommendations on what he described as the “new society.”

Following the Brexit vote, the expert noted that there was the need to train currency dealers in financial institutions.

Awoyemi charged the CIBN to develop a curriculum to train new set of financial service providers as a direct response to the expected developments that would attend the unfolding scenarios in Europe.

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