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The Central Bank of Nigeria (CBN) has linked its 75 per cent reserve requirement on certain government deposits to efforts to prevent excess cash in the financial system from worsening inflation.
The apex bank introduced the measure in September 2025, requiring commercial banks to retain 75 per cent of public sector deposits held outside the Treasury Single Account (TSA) with the central bank.
Speaking at the CBN Listens Programme in Ibadan, Oyo State, the Director of Stakeholder Engagement and Institutional Relations, Hakama Sidi-Ali, identified the policy as one of the instruments being deployed to improve liquidity management and strengthen the effectiveness of monetary policy.
Under the arrangement, banks cannot freely use the portion of affected deposits reserved with the CBN to issue loans or finance other commercial activities. The restriction is intended to limit the amount of money circulating within the economy.
Sidi-Ali said the policy formed part of broader reforms introduced under CBN Governor Olayemi Cardoso to improve financial sector stability and restore confidence in the economy.
She also highlighted changes to the foreign exchange market, including the introduction of the Bloomberg BMatch trading platform, alongside the ongoing banking sector recapitalisation programme.
Other initiatives she mentioned included the Non-Resident Bank Verification Number, the Nigeria Payments System Vision 2028 and the Nigerian Overnight Financing Rate, developed in collaboration with the Financial Markets Dealers Association.
The CBN director further stressed the importance of expanding financial services to underserved communities through partnerships with banks, fintech companies, mobile money operators and state governments.
She added that direct engagement with businesses, consumers and other stakeholders would help the apex bank understand economic challenges and improve public awareness of its policies.
The CBN maintained that managing liquidity remains central to its efforts to contain inflation and establish a more stable financial environment for businesses and households.
