The Central Bank of Nigeria (CBN), under Governor Olayemi Cardoso, says its ongoing reforms reflect a deeper and more structured effort to strengthen the stability of Nigeria’s financial system, restore investor confidence, and support long-term economic resilience. The reforms span foreign exchange management, monetary policy tightening, banking sector recapitalisation, and regulatory overhaul.
The renewed policy direction comes amid broader efforts to correct macroeconomic distortions, stabilise inflation, and rebuild trust in Nigeria’s financial markets after years of volatility and policy inconsistencies.
CBN Reforms Under Cardoso Focus on FX Control
The financial system stability reforms by the CBN have largely centered on stabilising the foreign exchange market and tightening monetary policy to curb inflationary pressures.
One of the most significant interventions has been the transition to a more unified and transparent FX market framework, replacing multiple exchange rate windows with a more market-driven system. This has improved price discovery and reduced distortions that previously affected investor confidence and business planning.
Alongside FX reforms, the apex bank embarked on an aggressive monetary tightening cycle, raising interest rates significantly to combat inflation, which had surged to multi-decade highs before beginning to ease in 2025 and 2026.
Monetary Tightening and Gradual Easing Reflect Policy Adjustment
CBN’s tightening stance, which pushed interest rates to historic highs, was aimed at restoring price stability and anchoring inflation expectations.
As inflationary pressures began to ease, the Monetary Policy Committee (MPC) cautiously adjusted rates downward, signalling improving macroeconomic conditions while maintaining a cautious stance to avoid reversing stability gains.
According to the report, this shift reflects a “data-driven” approach intended to balance growth support with inflation control as part of broader financial system reforms.
Bank Recapitalisation Strengthens Sector Resilience
A major pillar of the CBN reforms led by Cardoso is the ongoing recapitalisation exercise in the banking sector.
The policy requires banks to meet higher capital thresholds to strengthen their ability to absorb shocks, expand lending capacity, and align with global Basel III standards. More than 30 banks have already raised capital or met compliance requirements ahead of regulatory deadlines.
The recapitalisation programme is designed to reduce systemic risk, improve financial resilience, and position Nigeria’s banking sector to support a larger and more complex economy.
Strengthened Supervision and Risk Management Framework
Beyond capital requirements, the CBN has intensified regulatory supervision through stress testing, risk-based oversight, and tighter monitoring of credit exposure.
The regulator is also expanding its oversight to cover fintech platforms, digital assets, and cybersecurity risks as financial services become increasingly digitised.
These measures aim to ensure that innovation in the financial sector does not undermine systemic stability.
FX Reforms Improve Investor Confidence
The overhaul of the foreign exchange market has been one of the most impactful reforms under the Cardoso-led CBN.
The introduction of electronic trading platforms and a more transparent FX system has narrowed exchange rate disparities, improved liquidity, and helped restore investor confidence in Nigeria’s currency market.
Foreign reserves have also strengthened, supported by improved inflows and reduced FX backlogs, further stabilising external sector dynamics.
Financial Markets Deepening and Institutional Coordination
The CBN has also worked with other financial regulators to deepen Nigeria’s capital and fixed-income markets.
Collaboration with agencies such as the Securities and Exchange Commission (SEC) and the National Pension Commission (PenCom) aims to improve liquidity, enhance price discovery, and strengthen domestic savings mobilisation.
This coordinated approach is seen as essential for improving monetary policy transmission and long-term financial stability.
Digital Finance and Payment System Overhaul
Nigeria’s rapidly growing digital financial ecosystem has also become a key focus area for stability reforms.
The CBN has expanded oversight of payment systems, introduced regulatory sandboxes for fintech innovation, and strengthened monitoring of cashless transactions and agent banking operations.
These measures are intended to ensure that financial innovation remains secure, inclusive, and stable.
Conclusion
The CBN financial system stability reforms under Olayemi Cardoso reflect a broad-based strategy to stabilise Nigeria’s economy through FX reforms, tighter monetary policy, stronger banking regulation, and improved financial market infrastructure.
While challenges such as inflation and credit risks remain, the ongoing reforms are positioning the financial system on a more stable footing, with stronger institutions, improved transparency, and greater resilience against economic shocks.
