Nigeria monetary policy has been conducted under wide ranging economic environment since Its establishment In 1959.
the Central Bank of Nigeria (CBN) has continued to play the traditional role expected of the central bank, which is the regulation of stock of money such a way as to promote the social welfare (AJayi, 1999).This role is anchored on the use of monetary policy that is usually targeted towards the achievement of full-employment equilibrium, rapid economic growth, price stability, and external balance. Over the years, the major goals of monetary policy ave often been the two later objectives. Thus inflation targeting and exchange rate policy have dominated CBNS monetary policy focus based on assumption that these are essential tools of achieving stability.Commercial banks have been positively been affected through monetary policy by the federal government In other to attain a high level of government target objectives and attain high level of economic growth and stability Including relatively stable price and low unemployment Due to the present challenging conceptual and technical problem such as price instability, inflation rate, nfavorable balance of payment it Is difficult for the effort of monetary policy to show there full effort or ability on the economy.But monetary policy has become a variable measuring achieving aggregate economic potential In specific environment of the 1970’s it rest on the relationship between the rate of interest in the economy that is the price at which money can be borrowed, and the total supply of money.Monetary policy uses variety of tools to control one or both of these, to influence outcome like economic growth, inflation, exchange rates with other currencies and nemployment, where currency Is under a monopoly of Issuance, or where there Is a regulated system of issuing currency through banks which are tired to a central bank, the monetary authority has the ability to alter the money supply and the Influence the interest rate (to achieve policy goal).
Generally, monetary policy uses direct monetary instrument such as Selective Credit Control (SCC), Interest rate control prescription of cash reserves requirements, exchange rate control and imposition special deposits. Also used market based Instruments such as Open Market Operations (OMO) were not feasible than because narrowness and nderdevelopment nature of the financial market, the inadequate supply of the relevant debt instruments and the deliberate restraint on the interest rate.Monetary policy also uses the Instrument of issuance of credit rationing to guild and manage monetary technique. The Commercial bank internal operation if being affect by the instruction of the credit controls guidelines. The use of aggregate credit edit was dropped between April 1972 and March 1976 on the sectional distribution on bank credit throughout the period in other to stimulate the production sector.
Between 982 and 1 985 when stringent economic control were not effective In solving the deteriorating problem.Monetary policy appeared to have become a relatively heavy share of the burden of the adjustment In the banking sector. The adjustment of economic is processed to embarked upon by the Federal Government in July 1986 was to elimination of price distortion and reduction of the over dependence of he But the frame work of the monetary control remains the same except that same complex selective credit control but at the inception of the program the liquidity and cash ratio requirements were still in vogue.Commercial banks performance or operation are been affected by monetary policy, the Central Bank of Nigeria carries out this responsibility on behalf of the Federal Government by Decree 24, 1991 and other financial Decree 25, 1991. It is responsibility of the Central Bank to use monetary police to protect the banks and at the same time protect the public. The Central Bank ensures financial discipline among the banks in such a way that banks would remains strong and also promotes Instability in the banking sector, price instability, high lending rates, unfavorable balance of payment, inflation etc.
Best services for writing your paper according to Trustpilot
