• Says global financial markets moving away from subjective, judgment-based benchmarks towards transaction-based reference rates that reflect actual market activity
•Philip Ikeazor describes initiative as milestone in financial market modernisation
James Emejo in Abuja
Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, yesterday launched the Nigeria Overnight Financing Rate (NOFR) to significantly deepen Foreign Exchange (FX) market stability, strengthen price discovery, and boost investor confidence.
The initiative, a collaborative effort between CBN, Financial Markets Dealers Association (FMDA), and European Bank for Reconstruction and Development, is aimed at anchoring the financial system on a more transparent and transaction-based benchmark.
Speaking at the ceremony held at the apex bank’s headquarters in Abuja, Cardoso described the reform as a defining step in the country’s financial market evolution. He said it reinforced the central bank’s broader agenda of building a more resilient, efficient and credible financial system capable of supporting sustainable economic growth.
He stated, “The introduction of NOFR represents a significant milestone that reinforces the central bank’s continuous commitment to building a more resilient, efficient and credible financial services sector.”
According to Cardoso, benchmark interest rates remain central to the functioning of any modern financial system, as they serve as reference points for pricing financial instruments, guiding investment decisions, and ensuring effective transmission of monetary policy across the economy.
Cardoso stressed that global financial markets were increasingly moving away from subjective, judgment-based benchmarks towards transaction-based reference rates that reflect actual market activity, a shift Nigeria must fully align with to maintain credibility and competitiveness.
Explaining the design of the new benchmark, he said NOFR was developed in collaboration with market stakeholders to reflect real-time transactions in the Nigerian interbank market, thereby ensuring greater accuracy and reliability.
Cardoso said, “By anchoring the benchmark on observable transactions, NOFR enhances market integrity and credibility, reduces reliance on subjective estimates, minimises the risk of manipulation and improves price discovery and transparency.”
Cardoso stated that the reforms were critical to strengthening investor trust and deepening financial markets, adding that confidence remained the foundation of liquidity and stability in any financial system.
He said, “The result of all of that is deeper financial markets, and that is what we all crave for. Markets get deeper when they are trusted and when they are transparent.”
On monetary policy effectiveness, the CBN governor said NOFR would significantly enhance the transmission of policy decisions across financial markets, thereby strengthening the central bank’s ability to maintain price stability.
He said, “What we are attempting to do here is to ensure that we have an effective monetary policy transmission mechanism supporting the delivery of the price stability mandate of the central bank.
“If you don’t have that, then there is a very major missing piece.”
The CBN governor explained that the reform was part of a wider transformation of the country’s financial architecture aimed at supporting innovation, digitalisation, and the development of more sophisticated financial instruments, including derivatives and term benchmark products.
He said NOFR was not only designed for current market needs but also to prepare Nigeria for future financial complexity.
Cardoso said modern economies required forward-looking institutions capable of supporting evolving market structures.
Earlier, CBN Deputy Governor, Economic Policy Directorate, Mr. Philip Ikeazor, described the launch as a major milestone in the country’s journey towards a more modern, resilient and globally aligned financial system.
Ikeazor said the introduction of a credible transaction-based benchmark reflected Nigeria’s commitment not only to reform but also to actively shape global best practices in financial market development.
He stated, “Today is an important milestone, not simply because we are introducing a new benchmark, but because we are collectively taking another step towards stronger markets.”
He added that financial system had consistently demonstrated resilience in the face of domestic and global shocks, while continuing to evolve through improved infrastructure and institutional strengthening.
According to him, the shift towards transaction-based reference rates reflects a broader global transition that Nigeria is embracing with deliberate intent and coordination rather than passive adjustment.
Ikeazor said, “As global markets increasingly move towards more robust transaction-based reference rates, we have chosen not merely to follow change but to shape it.
“Today is not the destination. Rather, it is the beginning of another chapter, one that will require continued collaboration, adaptability and sustained commitment from all stakeholders.”
He stated that the NOFR launch marked the beginning of a new phase in market development that will require sustained collaboration, adaptability, and shared responsibility among all financial market participants.
He urged market participants to actively engage with the new benchmark and contribute to its successful adoption across the financial system.
