THE new monetary policies uncapped by the new Governor of the Central Bank of Nigeria (CBN), Malam Sanusi Lamido, has generated mixed reactions from stakeholders.
While most of the operators welcomed the new policy regime, others dismissed it, insisting that policy framework would not yield the expected dividends.
According to some operators, who oppose the policy, the instrument will expose banks to unhealthy competition for funds to meet uniform year requirements.
But some insisted that the decision to remove the interest rate cap and to return to Wholesale Dutch Auction System (WDAS) in the foreign exchange auctions was a positive move.
They based their argument on the need for unification of interest rates and forex markets toward price discovery and elimination of distortions.
The Chief Executive Officer of Financial Derivatives, Mr. Bismarck Rewane, who expressed optimism on the policy, said that it would guarantee inter-bank lending that would engender liquidity in the industry.
Rewane dismissed the notion that the policy would through competition swell banks balance sheet by Dec. 31, 2009 and possibly scurry the planned injection of funds into the industry.
"So long there is money to be made, and that the apex bank has guaranteed all such transactions, there is no way banks could shy away from making some extra money," he said.
The Managing Director of H.J. Trust and Investment, Mr. Harrison Owoh said that lowering of the monetary policy rate (MPR) to 6 per cent would not only make manufacturers receive funds at cheaper rate, but reduce inflation.
Owoh said that the new policy was designed to stimulate growth of the economy.
According to him, the only way people would feel the impact of the MPR reduction is when banks channel the benefit to all the segments of the market.
"If the manufacturers can borrow at lower rate, they will increase their production to make more profit and go into expansion," he said.
He also said that the new policy would help to boost liquidity in the financial system, as well as reduce unemployment in the country.
Owoh, who commended the governor, added that the new measure would enable banks contain toxic assets and leverage credits to the real sector.
The National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Mr. Sunny Nwosu said the new policy, which reduced MPR to 6 per cent was a welcome development as it would stimulate liquidity in the economy.
Nwosu said that low interest rate as provided by the CBN would reduce banks defaults and encourage the provision of loans to operators in the real sector of the economy.
He said that what stakeholders required now "is the will for the new policy to survive and achieve its overall objectives".
He urged the real sector operators to see the policy as another gesture to mobilize and stimulate sustainable production.