The Concerns of The Central Bank of Nigeria

 

The Central Bank of Nigeria is facing a series of challenges. The new tax reforms going into effect next year have generated controversy. Nigerians could find that their bank accounts are going to be subject to more taxation. The wave of tariffs continues to disrupt the economies of various countries. The CBN in April had to sell a total of $200 million to protect the naira. During that month, crude oil prices dropped, which made for a more precarious crisis. Nigeria is reliant on crude oil for foreign exchange. The CBN has not formulated a policy to address tariffs, debts to the IMF, or the decline in oil prices. CBN this year also sold $197.71 million   to banks to secure Nigeria's position in the foreign exchange market. To certain economists, this appears to be a massive transfer of wealth out of  Nigeria. The oil wealth and the CBN's banking system have not translated into financial security for the population. Concerns about liquidity and regulations are growing. The recommendations made were to use commercial papers to manage possible risk. The commercial paper is a temporary debt tool designed to manage future payments. The CBN began using cash stuffing to manage the situation. While budgeting physical cash was the responsible course of action, the result was increased costs on deposits for consumers. The debt to World Bank is estimated to be $18.2 billion. The CBN's biggest concern is the growing debt from international banking institutions.     

A Major Goal of The New Development Bank

 

The New Development Bank has outlined major objectives in the coming years. The focus will be on Africa. The NDB founded by BRICS wants to see changes in the global economy. The New Development Bank will finance infrastructure and digital projects. Investments will also be made in education. Such a policy makes sense considering the jobs of the future will require more skills and knowledge. A fourth industrial revolution is coming and the Global South should not be left behind. The African continent has large amounts of natural resources. This means it is a significant force in the world market. NDB President Dilma Rousseff  noted that direct foreign investment in Africa went from 4.9% in 2010 to 8.8 % in 2021. Rousseff described African nations as  quality partners. The challenges that remain are related to expanding payment mechanisms Rousseff added. Cooperation, stability of the continent, and banking procedures remain persistent obstacles. Economic growth is not slowing down in Africa. The result of this is that the New Development Bank's importance will be elevated. 

The Story of The Freedmen's Bank

 

The Story of The Freedmen's Bank is a documentary presentation produced by the US Department of the Treasury. The Freedmen's Bank was the creation of abolitionists, philanthropists, and business leaders. The formerly enslaved and African American veterans needed a secure place for their money. Those who had been enslaved so long never made a wage or obtained a bank account. Much of the foundation of racial inequality was that wealth was concentrated in white communities. Labor exploitation through slavery and the working class created the basis of economic inequality in America. The bank was created in 1865 and one of the last important acts done by the Abraham Lincoln administration. According to records the total amount of deposits were estimated to be about $57 million ( today that would be $115 billion ). The wealth was lost due to government corruption and a change in the Freedmen's Bank's charter. The banking panic of 1873 and mismanagement resulted in the bank's demise. The failure of the Freedmen's Bank demonstrates the weaknesses of capitalism and the US government's dishonesty when it comes to confronting economic inequality.   

The Collapse of Silicon Valley Bank

 

The collapse of Silicon Valley Bank represents a negative turn in the economy. One of the top US banks had its assets confiscated by regulators. These actions and bank failures seem very familiar to the 2008 global financial crisis. The collapse of  Silicon Valley Bank is one of the biggest bank failures in US history. The bank mostly provided services to workers in tech and and start-up companies. Some longtime tech companies also had investments in the bank. The assertion that this was just one case and should not be deemed disturbing is misguided. The banking sector is becoming unstable under the lack of regulation and mismanagement. The assets of Silicon Valley Bank are being transferred to  a newly created institution. The Deposit Insurance Bank of Santa Clara will pay for insured deposits. SVB had an estimated $209 billion in assets. The violation according to the FDIC was that accounts exceeded the $250,000 limit. The technology sector will be negatively impacted by the collapse of SVB. A combination of CEO avarice and layoffs have made the situation worse. Simultaneously, the Federal Reserve has failed to counter inflation. The Silicon Valley Bank has been active since 1983, but after 39 years it could not survive. The government has made a promise to ensure that depositors would get their money back. SVB demonstrates a combination of corruption and the hardship that start-up companies face. Large corporations can survive and new businesses are at a disadvantage.