CHAPTER ONE
INTRODUTION
1.1 BACKGROUND OF STUDY
The development of central banking can be said to data from the middle of the 19th century. But precisely, there was no exact data when banking started in Nigeria . historically, records showed that domestic banking activities started in 1961 when a sipping company elder dumpster line started banking service in Lagos , the chairman of the company in 1892 established the first banking institution African banking, corporation which metamorphosed into first bank now known as union bank of Nigeria plc. Was established.
Before 1952,the west African currency board (WACB) established 1912 was used as state banking for Anglo- phone west African countries, such as Nigeria, sierra-leone, Ghana and Gambia. The WACB was based in London and it issued noted and coins for the Anglo -phone west African countries.
The banking failure of the 1950s could not but head to the establishment of central bank to serve as banker to the banking system, to perform supervising role over the commercial bank issue currency notes and come thus, regulating the supply of money in Nigeria not only these, it acts as financial adviser to the government on monetary policy and implementing the policy and behalf of the government.
The central bank of Nigerians is government bank, establish to keep a country’s financial system under control and close supervision. The responsibility of managing the CBNis vested in the hand of the board of directors whose measures are appointed by the government .
The CBN is expected particularly in promoting economic growth by fostering the development of money and capital markets develop banking habits and sound financial system, in order to facilitate economy development , CBN tent to enjoy activities which extend beyond its traditional function. In this record, it played a unique role in the development of a Nigeria economy, particularly in promoting agricultural and industrial development in general.
1.2 STATEMENT OF PROBLEM.
Central bank of Nigeria can issue stabilization of Nigeria securities to specified institution to map up the excess liquidity of such institution. The effect that special depositor stabilization security would reduce the cash reserve and like other quantitative tools, reduce credit creation and therefore money supply.
Special deposits and stabilization securities are used when other instrument fail to achieve their targets they could be seem as instrument of last resort and target is the aggregate deposit in the banking system. Apart from the quantitative credit control which strive to control he flow of bank credit to different sector of the economy. By the means of selective credit control, the central banks on the sector of the economy or the economy activities to which loans should be given.
1.3 PURPOSE OF STUDY
a. To stabilize the price of goods and services in Nigeria
b. Equitable distribution of wealth
c. To satisfy the needy
d. To provide full employment
e. To maintain favorable balance and payment
f. To change in markets environment to which financial institution
markets and their users respond.
1.4 SIGNIFICANCE OF STUDY
The existing of central bank of Nigeria has benefits the Nigeria economy. The anger social and economic benefit of the CBN are
1. Issuing of currency
2. Control of the value
3. Funding agriculture
4. Funding industries
5. Prevention of bank crisis
6. Advise to government
7. Watching the external reserve
8. Encourage of exportation
9. Encourage of economic growth
10. Price stability
1.5 SCOPE OF STUDY
THE study contras on the role of central bank in stabilizing Nigerian economy, the function and objective of CBN will be examined.
Moreover, the problem of CBN encounter in stabilizing the economy and likely solution will be preferred.
1.6 RESEARCH QUESTIONS
1. To what extent has the central bank of Nigeria stabilized Nigeria economy?
2. To what extent has it protected the local industries from unfavorable foreign competition.
3. To what extent has it generated more revenue in Nigeria economy?
4. To what extent has it been acts as banker to commercial banks.
5. To what extent has it increase the amount of goods and service produced economy.
1.7 DEFINITION OF TERMS
Balance of payment: where there is a trade must be payment either now or later. It is the record of all financial and economic transaction between one country and the rest of the world over a given period of time. It is a record, it could be surplus or defits
Direct monetary policy: this is the use of banks credits on banks sectorial allocation of bank credit, interest rate policy errand serene influencing the cost and availability of credits.
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