THE ROLE OF CENTRAL BANK OF NIGERIA IN THE ECONOMIC GROWTH OF NIGERIA
INTRODUCTION TO CHAPTER ONE OF THE ROLE OF THE CENTRAL BANK OF NIGERIA IN THE ECONOMIC GROWTH OF NIGERIA
1.1 STATEMENT OF THE PROBLEM
The central bank of Nigeria is a financial agency established by law (Act of Parliament) charged with the power of ensuring monetary stability sound financial system by issuing legal tended currency, maintaining the value of domestic currency, and so on.
CBN sources of funding were share capital, general reserves, currency in circulation deposits by the federal government (FG), state government deposits, and deposits by banking industries, among other things.
The Central Bank of Nigeria (CBN) is expected to contribute to Nigeria's economic development in the following ways. The CBN made contributions such as issuing currency notes, funding agriculture, funding banking businesses, preventing bank crises, and so on.
Furthermore, the CBN is expected to contribute to economic growth through monetary policy in the economy, such as bank rates, open market operations (OMO), legal reserve ratio, special deposit, and moral suasion, among other things. CBN has contributed to economic growth by utilising money market instruments such as treasury certificates, banker unit finds, and so on.
My preferred topic for this assignment is monetary policy. The issue to investigate is the bank industries that the CBN has aided in their growth and development.
1.2 THE OBJECTIVES OF THE STUDY
The rationale of study in this project would encompass the aspect area in which the Central Bank of Nigeria aids economic growth and development of banking businesses in Nigeria. This can be accomplished in the following ways.
1. Determine whether the CBN is the sole financial entity authorised to issue money and distribute it within the banking industry.
2. To learn whether the CBN utilises monetary policy to restrict the actions of other banks in the banking industry.
3. To learn how the CBN will supervise finance houses in the context of Nigeria's economic growth and expansion of the banking industry.
1.3 THE SIGNIFICANCE OF THE STUDY
The significance of this project would improve Nigeria's economic growth and development in the following ways.
1. This initiative will help commercial banks and other financial institutions understand the challenges that their clients face when they do not use their services.
2. This research project effort will enable the federal government to actively participate in the financial sector.
3. This project effort will assist private and public companies in determining the necessity for money markets in order to benefit economic huge scales.
4. This research will allow bankers to determine the minimum and maximum amount of money that their customers can deposit in the bank.
5. This project work will also benefit students pursuing a national diploma or a higher national diploma who study banking and finance as part of their course of study.
6. This written work in this project will urge workers at the Central Bank of Nigeria to work actively in order to build a healthy financial system so that the Central Bank of Nigeria can engage in economic growth and development in Nigeria.
This will aid in the establishment, maintenance, and improvement of lines of communication between a bank and its public, ensuring that a banking system may be hoped for while still leaving opportunity for improvement in Nigeria's economic system.
1.4 DEFINITION OF TERMS
Certain words will be specified to help clarify this work.
1) BANK: Any individual who conducts banking business, which includes all financial institutions such as commercial banks, mortgage banks, acceptance houses, and discount houses, among others.
2) MONETARY POLICY: It is a tool used by the central bank to control the influx and outflow of money in the Nigerian economy.
3) MONEY MARKET: This is a market for borrowing and lending short- and medium-term loans or finances.
4) OPEN MARKET OPERATION: The CBN uses this weapon to sell and buy securities, bills, bonds, and government assets.
5) LEGAL RESERVES RATIO: This is the minimum percentage of deposits needed by law for commercial banks to deposit with the CBN.
6) CREDIT criteria: These are set criteria for the amount of loan and advance on commercial and merchant banks.