The Senate at plenary on Tuesday passed, for a second reading, a bill for an act to amend the Central Bank of Nigeria(CBN) Act 2007.

The bill was sponsored by 41 members of the Committee on Banking, Insurance and other Financial Institutions.

Leading debate on the bill’s general principles, the chairman of the Committee, Sen. Adetokunbo Abiru (APC-Lagos), said the bill was read for the first time on January 30.

He said the mandate of CBN was derived from the 1958 Act of Parliament as amended in 1991, 1993, 1997, 1998 and 2007.

Mr Abiru said the current act of 2007, which empowers the bank with the overall control and administration of the federal government’s monetary and financial sector policies, has not been amended for over 16 years despite growing changes to the bank’s balance sheet.

He said there were also challenges in monetary policy implementation occasioned by fiscal dominance and the rapidly changing financial landscape.

Mr Abiru said the proposed amendments were, therefore, aimed at strengthening the bank to discharge its primary mandate of maintaining monetary and price stability in support of the government’s economic growth objectives.

He said the amendment was designed to align its governance mechanisms with global best practices.

According to him, the current act made no provision for coordination of monetary and fiscal policies which accounted for the reason monetary policies of the bank often diverge from fiscal policies to the detriment of the economy.

He said the bill introduces a Coordinating Committee for Monetary and Fiscal Policies to coordinate the monetary, fiscal, and trade policies.

He listed the committee’s functions, including setting internally consistent targets of monetary and fiscal policies conducive to controlling inflation and promoting financial conditions for sustainable economic growth, applying caps to any fiscal deficit at a level that can be financed without having recourse to direct monetary financing from the bank, that is Ways and Means.

He said membership of the proposed committee should consist of the finance minister, who shall be the chairman, the minister of budget and economic planning, the minister of industry trade and investment, the minister of agriculture, and the CBN governor.

Others are the chief economic adviser to the president and the director-general of the Securities and Exchange Commission.

The senator said the bill also proposes to amend the provision to provide a single non-renewal term of six years for the governor and the deputy governors.

He said this was the practice adopted by many independent Banks, such as the United States Federal Reserve and the European Central Bank, where their Chief Executive Officers serve only one non-renewable term.

According to him, empirical evidence showed that a single term for the members of the executive and board members of central banks helps to reduce political influence on monetary policy decisions and the time inconsistency problem associated with non-independent central banks.

He said the bill proposes the establishment of the office of a chief compliance officer for the bank, of the rank of a deputy governor, who reports directly to the Board and may occasionally be summoned to appear before the relevant committee of the National Assembly.

He said this was to help strengthen the internal control systems put in place by the bank’s management.

He said the primary role of the chief compliance officer would be to ensure that the bank complies with all the public accountability and transparency requirements contained in extant laws under which the bank operates.

The bill was referred to the Committee on Banking Insurance and Other Financial Institutions for further legislative inputs and to revert to plenary in two weeks by Deputy Senate President Barau Jibrin (APC-Kano).

(NAN)