CBN eases liquidity rules, allows banks longer-term funding

The Central Bank of Nigeria (CBN) has relaxed restrictions on access to its Discount Window, restored longer-term repurchase operations and widened participation in Open Market Operations (OMO), in a move that could reshape liquidity management and improve flexibility across the foreign exchange and fixed-income markets.

The changes, contained in a circular dated August 12, 2026 and signed by Okey Umeano, Acting Director, Financial Markets Department, remove restrictions that previously prevented financial institutions participating in the Nigerian Foreign Exchange Market (NFEM) and primary auctions of government securities from accessing the CBN’s Discount Window.

The apex bank also lifted the suspension of Tenored Repo Operations, allowing repurchase transactions with maturities ranging from four to 90 days, while opening primary and secondary OMO participation to eligible individuals, corporates and non-bank financial institutions through Deposit Money Banks (DMBs).

In simple terms, a repo is a short-term borrowing arrangement in which a bank or other financial institution gets cash from the CBN by temporarily giving the CBN securities as collateral, with an agreement to buy those securities back later at an agreed price.

However, the measures come as the banking system receives substantial liquidity from maturing CBN instruments, with the apex bank injecting a net N5.21 trillion into the financial system between August 4 and 11.

A single N2.48 trillion OMO repayment on August 11 accounted for almost half of the liquidity released during the period, coming just a day before the CBN’s N700 billion Nigerian Treasury Bills auction.

Under the revised Discount Window framework, participation in NFEM or primary auctions of government securities will no longer prevent eligible institutions from accessing central bank liquidity.

“Restrictions on access to the Discount Window arising from participation in the Nigerian Foreign Exchange Market (NFEM) are hereby removed,” the CBN stated.

The same treatment now applies to primary auctions of government securities, although the restriction on same-day participation in OMO auctions by institutions accessing the Discount Window remains.

The CBN said the review followed developments in the foreign exchange, money and fixed-income markets and an assessment of its existing monetary policy and liquidity management frameworks.

The restoration of Tenored Repo Operations will give the central bank an additional instrument for managing liquidity over periods of four to 90 days.

The CBN said the operations would support effective liquidity management, improve money market functioning and enhance monetary policy implementation.

The apex bank also expanded access to OMO securities, allowing eligible individuals, corporates and non-bank financial institutions to participate through DMBs.

However, the CBN retained control over the volume, tenor and frequency of OMO issuances, which it said would continue to be determined by prevailing liquidity conditions and monetary policy objectives.

The latest measures follow aggressive liquidity management operations in recent weeks. The CBN mopped up about N7.18 trillion through OMO sales in July before reversing course with substantial repayments as securities matured.

The combination of increased system liquidity, wider OMO participation and restored tenored repos gives the CBN greater flexibility to absorb or inject liquidity while allowing financial institutions and other investors broader access to money-market instruments.