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Cardoso: Non-Bank Financial Institutions Key to Regional Integration, Economic Stability
CBN Governor Emphasizes Role of NBFIs in Regional Integration and Economic Prosperity
Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, emphasized the potential of Non-Bank Financial Institutions (NBFIs) within the West African Monetary Zone (WAMZ) to accelerate regional integration and promote shared economic prosperity.
Speaking at the 10th meeting of the College of Supervisors for Non-Bank Financial Institutions (CSNBFI) of WAMZ in Abuja, Cardoso highlighted the importance of monitoring trends, risks, and innovations associated with NBFIs and Other Financial Institutions (OFIs). He noted that the increasing transaction volumes of NBFIs pose significant risks to financial system stability.
Cardoso acknowledged the crucial role of NBFIs, including Fintech companies, in ensuring financial stability and specialized financial intermediation. Despite their smaller numbers compared to conventional banks, he stressed that NBFIs must adhere to global best practices.
Represented by CBN Acting Director of the Other Financial Institutions Department (OFID), Mr. Abayomi Orogundade, the CBN governor underscored the need for fintech regulatory requirements to be tailored to foster compliance with international standards.
He called for strengthening anti-money laundering practices, enhancing supervisory capacity in cybersecurity and fintech regulation, and implementing a risk-based supervisory approach for NBFIs. Cardoso urged supervisors not to become complacent, despite the milestones achieved by the CSNBFI.
“We must continue to push forward the agenda of strengthening anti-money laundering practices, deepening supervisory capacity on cybersecurity and fintech regulation, and implementing a risk-based supervisory approach,” he stated.
Cardoso highlighted the importance of monitoring trends and risks, noting that fintech loans, though currently small compared to traditional bank credit, are growing. He explained that fintech credit is often provided via electronic platforms that connect lenders and borrowers, with some platforms acting as new types of financial intermediaries.
“In many jurisdictions, these digital firms either hold a banking license and are subject to prudential requirements or are regulated as fintech payment service firms. Innovations related to crypto or stablecoin assets have also been reported,” Cardoso added.
Dr. Olorunshola Olowofeso, Director of the West African Monetary Institute (WAMI), noted that the outlook for WAMZ is gradually improving after turbulent years. However, he pointed out that funding challenges persist, with governments facing financing shortages, high borrowing costs, and impending debt repayments.
Olowofeso identified emerging risks to the financial system, including climate-related risks, internet disruptions, and cyber and social media threats arising from the digitization of financial services. He called on member states to develop adequate national cybersecurity strategies and appropriate regulatory and supervisory frameworks to strengthen the resilience of the financial sector.
The meeting provided an opportunity to review developments in the NBFI sub-sector within the zone for the second half of 2023 and the first quarter of 2024. It aimed to assess regulatory and supervisory challenges, share experiences, and provide relevant recommendations to the Committee of Governors of WAMZ.
Olowofeso emphasized the pivotal role of NBFIs in enhancing access to credit, offering cost-effective and reliable payment methods, and supporting economic growth. He stressed the need to strengthen the resilience of the NBFI sector to ensure stable financing and reliable payment services.
Source: thisdaylive.com
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