By Anthony Otaru, Abuja
The Central Bank of Nigeria (CBN) has called on Deposit Money Banks (DMBs) and all market participants to wholeheartedly embrace the principles of the Nigeria Foreign Exchange (FX) code.
The apex bank warned that individuals or institutions violating the FX code will face swift and decisive sanctions.
The CBN also disclosed that Nigeria’s external reserves have grown by 12.74 per cent, reaching US$40.68bn at the end of 2024, following the various reforms it embarked on.
The CBN announced the near completion of the forensic verification process of the $7bn of FX backlogs, adding that final settlements will be processed accordingly.
The CBN Governor, Olayemi Cardoso, stated this yesterday in a keynote address at the launch of the Nigeria Foreign Exchange (FX) code at the CBN headquarters in Abuja.
Cardoso said the six guiding principles and 52 sub-principles of the FX Code must become the standard for conduct across all participating institutions.
*Bank CEOs sign statement of commitment
All the banks’ CEOs in the country were made to sign statement of commitment abiding with the Code.
He highlighted that the launch of the Nigeria Foreign Exchange Code (FX Code) reflects the collective vision for a foreign exchange market built on integrity, fairness, transparency, and efficiency, critical pillars for Nigeria’s economic growth and stability.
The FX Code reaffirmed the collective commitment to shaping a more resilient and transparent FX market.
According to him, the FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in the nation’s foreign exchange market.
Cardoso reiterated that business-as-usual would no longer suffice, cautioning that the era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity.
“As an example, the $7bn of FX backlogs that have taken over 12 months to verify has led to the discovery of multiple unethical and even illegal practices that we should not be proud of as a nation. The forensic verification process is now near complete, and final settlements will be processed accordingly,” Cardoso stated.
He added, “Similarly, the period of unprecedented ways-and-means-financing inflicted significant damage on our economy, contributing to inflation, currency depreciation, and eroded public confidence.
“These practices must never return. The FX code is a firm rejection of such distortions and a firm commitment to a future defined by fairness, trust, and market-driven principles.
“The system itself played a key role in past challenges. Unethical behaviours and systemic abuses – whether by those with privileged access or by complicit participants – eroded public trust and harmed our economy.
“We will not tolerate any attempts to revert to those practices. Any individual or institution that violates the FX Code will face swift and decisive sanctions.”
The CBN Governor informed that the journey towards market reform is already yielding results.
According to him, 2024 was marked by structural reforms that sought to return the naira to a freely determined market price and ease volatility as several distortions were removed from the market.
“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 our economy, restore order and credibility to our FX market, and refocus the CBN on its core mandates,” Cardoso stated.
Notably, he said the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December 2024 has improved market transparency and efficiency, noting that “since its launch, the naira has appreciated significantly—from ₦1,663.90 on December 2, 2024, to ₦1,536.72 as of yesterday.”
Cardoso explained that exchange rate stability is a cornerstone of macroeconomic health for an economy like Nigeria’s and that, beyond daily market rates, the exchange rate influences critical indicators such as the balance of payments, external reserves, international trade, and inflation, among others.
He acknowledged that inflation remains a critical challenge as rising prices erode purchasing power and increase the cost of living.
*External reserves up, hits $40.68bn
He added, “But we are tackling this issue head-on by fostering exchange rate stability. Furthermore, our external reserves have grown by 12.74 percent, reaching US$40.68bn at the end of 2024. This achievement reflects the effectiveness of reforms to pay off legacy FX obligations and organically growing reserves.
“The FX Code marks a new era of compliance and accountability. It is not just a set of recommendations but an enforceable framework. Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions. Market participants must recognize that adherence to these principles is not merely about compliance but 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. I am particularly pleased that the industry’s leadership is in this room to reinforce a collective commitment to the journey ahead.
“Self-regulation and conduct are at the core of the changes in the 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.”
The FX Code is built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, and confirmation and settlement processes.
These principles align with international standards while addressing Nigeria’s unique challenges.
They provide the foundation for a resilient and transparent market that inspires confidence among domestic and international participants.
Cardoso said, “Leaders in this room—board Chairs, Managing Directors, and Chief Compliance Officers—must lead from the front. Embedding these standards within your organisations is not optional.”
He reiterated that the era of opaque practices is over, and the “CBN will not hesitate to act against any institution or individual that undermines the integrity of our financial markets. The FX Code is a binding commitment to accountability and transparency – and we must all play our part.”
As the banks’ CEOs signed a statement of commitment, Cardoso reminded everyone that the moment served as a collective pledge to transparency, ethical conduct, and fairness in the market.
He called on all to build a financial ecosystem that embodies resilience, global competitiveness, and economic prosperity.
All the deposit money banks pledged to abide by the FX Code.
