Implement a Cashless Policy on FX Transactions Expert Tells CBN
A seasoned Finance and Investment Analyst, Adejumo Isaac, has presented a groundbreaking solution for enhancing the short-term stability of the Naira exchange rate.
Isaac urges the Nigerian government, through the Central Bank of Nigeria (CBN), to implement a cashless policy on forex transactions, a move he believes could significantly impact the nation’s economic landscape.
In a compelling statement, Isaac advocates for a transformative policy that mandates all forex transactions to be conducted electronically, eliminating the physical presence of foreign currencies such as dollars, pounds sterling, euros, and CAD in day-to-day transactions within the country.
He proposes a one-month grace period for individuals holding physical forex to deposit it with commercial banks, after which non-compliance would attract a minimum jail term of six months, without the option of a fine.
Isaac contends that currencies like dollars and euros are rarely used for minor transactions involving everyday items in the market.
Instead, he emphasizes that major transactions such as paying school fees, medical expenses, and importing raw materials already flow through the banking system electronically, making physical cash unnecessary.
The finance expert envisions that this policy would channel the majority of forex cash currently stored in people’s homes into the formal banking system.
This, he argues, would bolster forex liquidity, fostering economic growth and stability.
By curbing volatility and speculative demand, Isaac believes the proposal would eliminate the concentration of forex in the hands of a privileged few, ultimately benefitting the broader citizenry.
Looking towards a long-term solution, Isaac suggests a two-pronged approach.
Firstly, he advocates for an increase in crude oil production to at least 2 million barrels per day, aiming to boost dollar inflow.
Secondly, he emphasises the importance of promoting backward integration to reduce reliance on imports, particularly by refining petroleum products domestically.
These measures, he contends, would further contribute to a more stable forex landscape.
Source: Daily Trust
