I.I BACKGROUND OF THE STUDY
Before the establishment of the Central Bank of Nigeria the West African Currency Board (WACB) which was established in 1912 had the responsibility for issuing legal tender currency. The WACB was set up to promote the financing of the export trade. It was the duty of WACB to issue West African currency. The exchange of existing currencies and the investment of reserves.
The reserve were invested in Britain and this is in a way facilitated Nigeria’s international payments. However because the WACB was linked to the British system it could not engage in monetary management neither Nigerian trained in the art of monetary management.
In order to promote the growth of the domestic money and capital markets. There by eliminating this deficiency. The Central Bank of Nigeria was established in 1958 and it commenced business on 1st July 1959.
The central bank of Nigeria formulates monetary proposal in a memorandum which is sent to the government through the minister of finance. Taking into consideration the views and suggestions of the banking community and other business interest and interested public groups and other business interest and interested public groups and individuals.
Monetary policy in Nigeria is conducted by the Central Bank of Nigeria set up under the Central Bank of Nigeria (CBN) ordinance of 1958 (as amended from time to time) to serve as banker and foreign exchanged dealer principally to the federal government of Nigeria.
1.2 STATEMENT OF THE PROBLEM
The main objective of the study is to undertake a review of the central Bank of Nigeria monetary policy measures from 1980 – 2005 in the review. The objective, the roles, the phases and the appraisal of monetary policies between the period in question, with be discussed.
1.3 OBJECTIVES OF THE STUDY
The studies conducted by the researcher an performance appraisal of monetary policy of central bank of Nigeria reveals that the objectives of the study includes the following.
1. To determine how rural dwellers had responded to the services of central banks.
2. To identify the type of customer that patronize central banks.
3. To examine if the availability of the loan has redulod the level of rural urban migration.
4. To determine any other on banking services. The are reudered to the public by the central banks.
5. To ascertain the extent to which granting of loan to rural dwellers has affect an unemployment level.
1.4 SIGNIFICANCE OF THE STUDY
Although students research abounds in this area, this work will serve as an addition to existing literature in this topic. It would also find out the performance appraisal of monetary policy.
This project would also provided insights to the students of Banking and Finance and individuals who do not know much about the activities, operation and roles of the monetary policy in the central bank of Nigeria.
Above all, the essence of the study is to point out a positive direction for a smooth operation for the use of the monetary policy.
1.5 LIMITATIONS OF THE STUDY
Although certain journals textbooks magazine were used in the course of this study. The main limitation of the study were finance and problem of data collection.
Due to this limitations the project writing was carried out within the limited time available and finance.
REVIEW OF RELATED LITERATURE
2.1 WHAT IS MONETARY POLICY.
Monetary policy deals with measures to control money supply by the monetary authorities in order achieve specified in desired economic objectives.
Basically monetary policy work on two principal economic variables aggregate supply of money in circulation and the level of interest rate the basis of interest rate level being to encourage savings this takes the form of the development of branch banking which tap small saving. This monetary policy has been defined in various ways by different scholars.
According to Adekanye 1986 monetary policy can be described as the various ways by which the federal Government and the central bank seek to influence the supply money and credit as well as their prices as indicated by interest rates in order to achieve stated on desired economic goals.
In order to support the definitions Chukwudire (1993) refers monetary policy as a measure to control the availability cost and use o9f money and credit in the economy for the purpose of achieving stated objective he west further to say the broadly speaking monetary policy covers a board range of policies and measures which include not only such monetary measures that influences the availability cost and use of money but also those non-monetary measures which influences monetary situations.
He argued that in so far as these non-monetary measures which influences monetary situations. He argued that in so far as these non-monetary measure sure as price control income polices physical control budgetary measures and measures that deal with inflation aim at influencing monetary policy.
In his own contribution Ken Chinemelu (1988) looked at monetary policy as a deliberate effort by the government through the Central Bank to control the money supply and credit conditions for the purpose of achieving certain broad economic objective among the objectives of state policy are full employment price stability economic growth and balance of payment position.
Another contribution to this monetary policy was Larry Aerobe (1987) He defined monetary policy as the process where by the monetary authority attempts to achieve a desired set of goals by controlling either the money supply. The cost and availability in Nigeria refers to the central bank of Nigeria.
The monetary policy works through the banking system and for one to understand clearly how monetary policy works it will require the person a knowledge of the banking system.
Aerobe further says that monetary policy is the management of the expansion and contraction of volume of money in circulation for specific purpose of achieving certain declared national objectives. Monetary and banking regulation and expressions of monetary policy since they affect the volume of money in the economy.
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