Both the States and Federal Government will be required to open “Special Domiciliary Accounts” with commercial banks of their choice. The special account can only be accessed by monetizing the balances into Naira. In other words, the Governments cannot withdraw dollar cash but may also utilize part of their domiciliary accounts for settlement of external obligations (e.g. opening of letters of credit).
From September 2007, the exchange rate that will be applied in the monetization of Federation Account as well as the “Special Domiciliary Accounts” will be the inter-bank rate on that day. As the market deepens, the CBN will gradually withdraw from the WDAS, and only intervene in the market (buy or sell forex) as may be required to achieve defined policy objectives.