THE ROLE OF CENTRAL BANK IN ESTABLISHING NIGERIA ECONOMY (A CRITICAL REVIEW)

THE ROLE OF CENTRAL BANK IN ESTABLISHING NIGERIA ECONOMY (A CRITICAL REVIEW)

PROPOSAL

 

Central bank is generally known to be concerned with he maintenance of monetary stability.  This task will involves the regulations of money in circulation  consistent with excessive growth is money supply rates  to high

Rates of spending on domestic or foreign goods.

This research will be carried out through oral interviews.  Questionnaires will also be distributed in collecting data and information .  analysis will be done on the data base on the testing and proofing of hypothesis.  Secondary data will also be source by the researcher; and they include journals, magazines, textbooks, periodicals etc.

The researcher as a student will  experience many difficulties  in the cause of collecting data which will include;

  1. The time given is limited for the researcher to collect enough data on time
  2. The responsible officials will not give audience to the researcher.

One of the strategies of achieving this objectives is through the adoption of the liquidity management policies / techniques which afford the CBN the use of monetary policy instrument to influence bank reserve and the growth in  money supply.  Also the government should grant of relief granting of loans for the establishment of industries and importation of raw materials on concessionaire import duties.

ABSTRACT

 

Central banks are general known to be concerned with the maintenance of monetary stability.  This task involves the regulation of money in circulation consistent with the absorphic capacity of the economy axiomatically, excessive growth in money supply rates to high rates of spending on domestic or foreign goods given that domestic supply of goods and services in essentially in elastic in the short run, excess liquidity is likely to result in substantial inflationary is likely to result in substantial inflationary pressures in the economy.  To the extent that spending pressures are directed towards foreign goods or (assets0 balance of payment pressures will ensure.  Thus, the task of monetary authorities is to ensure that the growth in the domestic  liquidity is consistent with the  objectives of out-put growth, inflation and the balance of payments.  This at any given time the CBN would ensure that supply of money is sufficiently optimal to sustain non-inflationary out-put rate and exchange rate stability.

One of the strategies of achieving this objectives is through the adoption of the liquidity management policies / techniques which afford the CBN,  the use of monetary policy instrument to influence bank reserve and consequently the growth in money supply.  The ability of the central bank to effectively control domestic liquidity depends interaction the level of the economic development particularly the state of its financial system the number and types of policy instruments available to the central banks and degree of harmonization between monetary and fiscal policies

CHAPTER ONE

  • Introduction
  • Objective of the study
  • Research questions
  • Statement of hypothesis
  • Statement of problem
  • Significance of study
  • Scope and limitations of the study
  • Definition of terms

CHAPTER TWO

REVIEW OF RELATED LITERATURE

  • Introduction
  • Meaning of central bank
  • The central bank Vs commercial banks
  • The relation of CBN with other banks
  • Central bank of Nigeria and its objectives and functions
  • Monetary policy, meaning, objectives and instruments
  • Fiscal policy, meaning, objectives and instruments used.
  • Stabilization policies, objectives and conflicts,
  • The role of CBN in stabilizing Nigeria economy
  • Problem faced by CBN ins stabilizing Nigeria economy

CHAPTER THREE

RESEARCH DESIGNS AND METHODOLOGY

  • Introduction

3.1     Population

  • Samples selection
  • Description of instruments used in data collection
  • Questionnaire
  • Abstract
  • Personnel interview
  • Questionnaire distribution and control
  • Sources of data
  • Procedure of data Analysis

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

  • Introduction

4.1     Analysis of response to questionnaire

  • Testing and proofing of Hypothesis

CHAPTER FIVE

SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

  • Summary of findings

5.1     Recommendations

  • Conclusions

Questionnaire

Bibliography

 

 


CHAPTER ONE

 

1.1     INTRODUCTION

The growth and development of international trade along West African coast played a major role in extending the medium of exchange beyond trade by barter in the nineteenth century.

The ‘’native currency’’ system which relied on item such as manila, cowries, brass and copper rods   had to accommodate foreign currencies such as Maria Theresa dollar and British silver coins increased trade motivated the setting up of the Bank of British West African [BWA] in 1894, thereby drastically reducing the barter system and ushering in a rudimentary form of commercial banking.

The issue of legal tender currency for the West African region  was however deferred till 1912 when the west African currency Board  [WACB] was established. The WACB was an offshoot of the recommendation of the EMMOE committee set up by the then secretary of state the Rt. Ifon. Lewis Harcourt. The WACB retained the services of the BBWA as its currency distribution agent. It set up four currency centers in Lagos [Nigeria] and Bathurst, now Banjul [the Gambia].  The currency in circulation in West Africa increased steadily through the 1950s in response to the growing demand and increase in the World price for West African primary products such as cocoa, groundnuts and palm oil.

The WACB, however, did not have discretionary control over the money stock of the territories under the money stock of the territories under its sphere of influence. It was set up primarily to promote the influencing of export trade. Specifically, it was changed with the issue of a West African currency, the repatriation of such currencies and the investment of reserves. There was a fixed parity between the local currency and the British pound while the currency had 100 percent sterling banking. The   reserves   were   invested in British   and this way facilitated Nigeria’s international   payment.  As the WACB was automatically linked   to the British system, the investment policy   was   rather conservative in   the   sense that   sterling reserves were invested only   in   Britain.   Moreover, the   WEACB   could   not engage   in   monetary   management, neither   were Nigeria’s   trained   in   the   art.   In   order to eliminate   this   deficiency   and promote    the   growth   of the   domestic    money   and   capital   markets, especially   as    the   country   marched    toward   political    independence   in    1960, the CBN was   established   by   the   central   Bank Of   Nigeria   Act of   1958.

The bank   commenced   business   on   1st July   1959    with   an   initial   capital equivalent to   N30 million.  The    legal   framework of   the central   bank   has been   strengthened    over    time   to   address   lapses   in   financial   system prior to   the    enactment   of 1958   central   Bank   act   the   banking   system   in    Nigeria   was largely unregulated. Initial attempt   in   1952   at streamlining    the   practice   to   banking    to ensure monetary   stability through    the   enactment   of    the   banking ordinance     did   not   quite address   the   problem. The   spate of    bank failures could   not   be stemmed, thus the central   Bank   Act   of    1958    was   enacted to   formally establish   a   central   monetary   authority   that   would   perform   the    traditional   roles   of   a     central     bank. The   1969   Banking   Act   and its amendment, which   defined   the   business    of    banking    and    stipulated   penalties   for   banking   malpractice   further   strengthened      legal    framework.

To      further     strengthen    the   supervisory     capacity   of    the   bank, the    central   bank of     Nigeria decree   No. 24 and   Bank and   other   financial, Institutions  [Bofi] Decree N.25 of 1991 were promulgated.  The Bofi Decree among other provisions centralize the    functions   of   licensing as well   as   regulation of    banks   and   other   financial   institution in    the bank.

The     current   legal   framework within   which    the   CBN    operates    in   the   central   Bank growth in economics development is one of the many problems facing the Nigerian economy through these problems manifesting themselves   in most   developing countries and    yet   this   gets   worsened with   the   military rule, Nigeria   is a typical   area   in point. Hence the   essence of this research is to examine   the   topic ‘‘THE ROLE OF CBN IN    STABIBILISING   NIGERIA ECONOMY’.

 

1.2       OBJECTIVE     OF   THE    STUDY.

The   objective of this study shall be;

To ascertain why the CBN is yet to stabilize the Nigeria economy with instrument (s) of monetary and fiscal policies with their objectives and role they play in the stabilization of the economy.  Also the study shall also look at why the economy of Nigeria needs to stabilize and problems facing CBN in stabilizing Nigeria economy and to make recommendations where necessary

 

1.3     RESEARCH QUESTION

a    Why is it that our economy is yet to developed

  1. Does the establishment of CBN help in stabilizing Nigeria economy.
  2. Does monetary

 

 

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