CENTRAL BANK OF NIGERIA AS A CATALYST TO NATIONAL ECONOMIC POLICY AND DEVELOPMENT IN NIGERIA

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CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

Economic policies are deliberate actions by the authority geared towards influencing total spending, output, income, cost of money, employment and other economic activities in an economy.  Economic development on the other hand is defined as a process whereby the real precipitate income of a country increases over a period of time (I day 2005:52).  Therefore, national economic policy and development is all about plans of action the central bank as regards structural changes that will reflect in the composition and evaluation of aggregate output or national income, the size of the national output on per-capital basis and the equitable distribution of the national output among the populace.

        However, before the establishment of the Central Bank of Nigeria, the formation of the national economic policies was left entirely in the hand of the colonial government that promoted the interest mainly to the detriment of the Nigeria populace.

        According to Nnanna in Oleka, (2006:186), he stated that conduct of monetary policy in Nigeria under the colonial government was largely dictated by the prevailing economic conditions in Britain.  The instrument of monetary policy at that was the exchange rate, which was fixed between the Nigeria pound and the British pound.  Moreover, since the inception of the Central Bank of Nigeria in 1958, the function of policy formulation has been the sole responsibility of CBN.

        According to Oleka (2000:95) section 4 of the 1958 ordinance now section 3 of Central Bank of Nigeria Decree 24 of 1991 stipulate one of the main objective of the CBN to include: promotion of monetary stability and sound financial system in Nigeria.