CBN Governor Godwin Emefiele has warned politicians looking to withdraw their naira in exchange for dollar speculations for election purposes insisting that it was illegal to do so.
Mr. Emefiele was responding to questions from journalists who pressed him on the likely impact of election spending on the value of the naira when compared to the dollars.
The Governor insisted that the apex bank was monitoring the situation and will continue to use its monetary policy (discretionary powers) tools to mop up excess liquidity in the system when it believes banks might be looking to facilitate election spending or speculate on forex.
Speaking specifically about the use of forex for election purposes he warned those who might be considering this to avoid doing so as it was illegal.
- “As for those who want to buy sic take naira from their account to buy dollars because of the election. I want to warn not advice that it is illegal to do so. Whereas it will sound more convenient to carry dollar because you could carry little dollars but with a lot of value in your pocket, but if the security agencies hold you, you know the implication of that.”
He also threatened that the CBN also has monitoring tools in this possession that it can use to track the suspicious movement of forex from one account to another.
- “We will continue from our own side to use our own apparatus through which we monitor movement of funds between customers or between banks and customers or from one bank to the other bank and any bank that we find in those form of transactions will be considered to be unauthorized or we considered to be illegal you can consider that your account will be placed on PND (Post No Debit).
Post no Debit (PnD) is a punitive tool used by the CBN to restrict the transfer of funds from any bank account in the country suspicious of being used illegally. When the restriction is placed, the account can not have any money transfered or withdrawn out of it for the duration it is under “PnD”.
CBN is a Monster
Emefiele also warned potential collaborators that the CBN is a monster and will not hesitate to use the PND to stop customers from using their accounts for any bank transactions in the country.
- “You can see CBN has turned itself into a monster that uses an injurious tool to stop you from conducting illegal flows whether domestic or foreign currency. So, I will advice you not to get involved in unauthorized and illegal movement of money from your bank to your account or from one account to another account, or a currency conversion. When you do that and you are caught in that practice your account will be placed on PND” he concluded.
CBN Examiners typically place suspicious accounts on PND during routine banking examinations. Banks are also heavily fined when they are found wanting. Some PND accounts are also lifted via court orders in favour of the owners of the accounts
Two questions raised here,
1) Why send out warning if you really intend to take action against illegality? We know this is an ongoing practice? It is the political class is exempt from punitive actions or this is simply a case of just bark without a bite.
2) How is raising the interest rates in favor of the macroeconomy at large? how does this favor business/commercial activities against inflation?