From the available figures, interest rates have ‘crashed’ to an all-time low. But, surprisingly, the lending rates are still unbelievably dangerously high. These contradictions have led many to wonder what could have been responsible for this anomaly!
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Since it is from its Standing Lending Facility that the commercial banks have been borrowing in the false name of CBN’s lender of the last resort, understandably, the commercial banks needed such artificially kept low borrowing rates from the CBN. Little wonder, as high as nine per cent is the profit margin these banks easily make by lending to the SLF either to the real sector or simply purchasing Treasury bills.
So, the next question becomes: For how long should these unhealthy commercial banks remain on the CBN’s life support machine? We all know that this cannot go on forever before their toxic assets are exposed or the urgency for their recapitalisation is known by depositors and investors.
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Another proposed reform by Atiku was to quickly do away with naira’s present dirty float, which has always allowed the CBN to go ahead with its skewed interventionist forex policy, which is known for being responsible for forex speculations. By replacing it with clean float and with the market determining supply and demand, the naira’s true value will be known and with that investors will be able to make informed decisions on the country’s economy.
But with the CBN governor, Godwin Emefiele, leading this bizarre monetary and regulatory policies, no doubt, nothing will stop these anti-investment, anti-growth and anti-job policies of the apex bank, let alone bring to an end the endless fraudulent manipulations of interest rates that are promoted at the Bankers’ Committee meetings.
From this, you can see that commercial banking as we know today already has the death roll.
And with the replacement of the presentation fractional reserve banking with zero reserve banking, where there is no more commercial bankers as the financial transactions’ middlemen, commercial banking as it has been known since the early 17th century is on its way to disappearing.
Yes, fintechs are already here with us, but there is something more of the creative destroyer than fintech that is on its way.
When that happens, commercial banking will suddenly die the same way post offices died. Or who goes to post offices these days? (Punch)