CBN Introduces EFEMS to Boost FX Market Governance and Transparency

CBN Introduces EFEMS to Boost FX Market Governance and Transparency
CBN Introduces EFEMS to Boost FX Market Governance and Transparency

Nigeria’s Central Bank Introduces Electronic Foreign Exchange Matching System to Boost Transparency and Market Efficiency

The Central Bank of Nigeria (CBN) has taken a significant step towards improving the foreign exchange market in the country by introducing an Electronic Foreign Exchange Matching System (EFEMS). The new system is designed to enhance governance, transparency, and facilitate a market-driven exchange rate that is more accessible to the public.

According to the CBN, EFEMS will be operational in the Nigerian Foreign Exchange Market by 1 December 2024, following a two-week test run in November. The system is expected to curb speculative activities, reduce market distortions, and provide the CBN with improved oversight capabilities for regulating the market effectively.

Dr. Omolara Duke, Director of the Financial Market Department at the CBN, explained in a circular that EFEMS is designed to promote a market-driven exchange rate that is more accessible to the public. The system will also publish real-time data on prices and buy/sell orders, providing market participants with accurate and timely information.

In collaboration with the Financial Markets Dealers Association (FMDA), the CBN will release the rules for operating the system, which will be guided by the Nigerian FX Code and revised Market Operating Guidelines. Authorized dealers are required to ensure full compliance with the existing guidelines governing the Nigerian foreign exchange market and complete all necessary documentation, training, and system integrations ahead of the December go-live date.

The introduction of EFEMS is expected to promote a more transparent and efficient foreign exchange market in Nigeria, which will benefit the country’s economy and investors. The system will provide a platform for authorized dealers to conduct foreign exchange transactions in a more efficient and transparent manner, reducing the risk of market distortions and speculative activities.

As the CBN continues to implement EFEMS, the country’s foreign exchange market is expected to become more stable and attractive to investors. The system will also provide the CBN with improved oversight capabilities, enabling the bank to better regulate the market and protect the interests of market participants.

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