Communication, important for credibility of CBN, says ex director

A former Director of the Central Bank of Nigeria (CBN), Mr Charles Mordi, on Thursday said free communication of information, ideas and policies of the apex bank was key in maintaining its credibility.

Mordi, who was a former Director, Research Department, CBN, said this in Calabar at a seminar organised by the CBN for Finance Correspondents and Business Editors.

In a paper titled “Measuring the Credibility of Central Banks; a case study of CBN “, Mordi said keeping investors and the general public abreast of situations as they occurred, whether good or bad, built trust in the economy.

He said communication should be clear and direct without leaving room for ambiguity, misinterpretation and misconception.

Mordi said the Apex bank’s strategy of briefing the press after Monetary Policy Committee meetings, publication of the communiques and personal statement of each member had improved the bank’s image.

He commended the CBN for its tight monetary policies which had helped to maintain inflation rate at a single digit and stability at the forex market.

Mordi said that the character of the person heading the CBN could determine the level of trust investors and stakeholders had in the quality of policies introduced by the apex bank.

He said this was important because the CBN was mostly seen as an extension of the person heading the institution, thus whatever happened to him could easily affect the market and the economy in general.

“The problem we have today started from February last year when the former CBN governor was suspended.

“As soon as the announcement was made that Sanusi has been suspended, the market reacted. Foreign investors who had so much confidence in Nigeria began to exit.

“And we were still battling to get out of that problem when July last year came and crude oil price in the international market crashed. So the combination of those two factors are what we are suffering today.

“To show that CBN lost some of its credibility after the suspension of Sanusi in March last year, CBN was to host the governors of African Central Bank, but most of the governors did not come, just because of that singular act,” he said.