An estimated N1.2 trillion of public sector funds were transferred to the Central Bank of Nigeria (CBN) by Deposit Money Banks in the country in compliance with the Federal Government directive on Treasury Single Account (TSA).
President Muhammadu Buhari had ordered that all revenues be paid into the “Treasury Single Account” (TSA) from yesterday, as part of a drive to fight corruption and aid transparency.
“No trading is currently going on because no bank was willing to put out quotes until there is a clearer direction with the implementation of the Treasury Single Account,” Vanguard quoted a dealer to have said.
“The market is frozen right now, as no trading is going on,” a bank treasurer also said.
Analysts have predicted that implementation of the government policy will drain liquidity from the banking system, potentially putting some banks in a dire situation.
Bismarck Rewane, CEO of Financial Derivatives Company said: “We expect an initial paralysis in the market and a disruption of operations of some of the banks, but they would overcome that.”
According to him, the Central Bank could reduce the size of the Cash Reserve Requirement (CRR) commercial lenders are expected to keep and inject some liquidity into the banking system to minimize the impact of the new accounting policy. The CRR, which is the amount the Central Bank requires banks to set aside, is currently 31 percent for both public and private sector deposits.
