EFFECTIVENESS OF MONETARY POLICY OF THE CENTRAL BANK OF NIGERIA

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Monetary policies in Nigeria and the United Kingdom, the central bank of Nigeria and the bank of England act as advisers to the government over monetary policies. The authorities take the final decision on the matters. In Germany, the contrast in the case because the German central, the bunds bank of Germany has a constitutional independency in setting the monetary policies. The central bank of Nigeria lender the federal ministry of finance (FMF), we have the central bank of Nigeria and this is the apex of the regulatory institution of the Nigeria financial sector. The bank promotes and maintains monetary stability as well as issuing sound and effective financial system in Nigerian. It issues legal tender i.e. currency note and coins in Nigeria and maintain Nigeria external reserve to safeguard the national value of legal currency. The CBN has the responsibility of formulating and implementing the monetary and exchange rate policies for Nigeria and many other functions that they perform in Nigeria.
The central bank of Nigeria has been able to excise its statutory power through its monetary policies and developmental function in promoting monetary and economic stability. In Nigeria for example, by controlling the, quality and directions of credits, monetary policies and optimum quality of money supply has been maintained and this enhances the economic stability. It development function encourage the establishment of necessary development bank and financial institutions wh8ich assist the economic development.
The effectiveness of any central bank hinges crucially on its ability to promote monetary stability. Attainment of monetary stability rest on the central bank, the ability to involve effective monetary policies and to implement then efficiently. Nigerian bank and other bank were operated without nay control in their availability and supply of money and circulation and this has brought an effect in our economic development and also distress among banks. As time went further, the central bank of Nigeria decided to introduce a new policy called the monetary policy in the banking sector and through the introduction of that monetary policy into banking industries helps many banks and also in our economy to stabilize the value of money.
The central bank of Nigeria introduces this policy with some instrument to the banking activities and such instrument is as follows;