Nigeria’s broken money markets force central bank into desperate credibility overhaul

• New benchmark targets distorted interbank lending signals
• CBN seeks stronger monetary policy credibility and investor confidence

ABUJA, NIGERIA – Nigeria’s central bank is attempting to repair one of the country’s most persistent financial market distortions: interbank rates that often say more about excess liquidity than the true cost of money.

The introduction of the Nigerian Overnight Financing Rate (NOFR) marks a significant shift in how Africa’s largest economy measures short-term borrowing costs, as policymakers seek to strengthen monetary policy credibility, deepen financial markets and reassure investors unsettled by years of volatility and opaque pricing.