THE CENRTAL BANKING AND MONETARY REGULATION IN NIGERIA

CHAPTER ONE   1.0     INTRODUCTION           The question of money is a very important question today.  This is because of the role of money in social and economics development. Money plays a key role in this sectors and requires that its position is always under focus. The government of any country keeps it’s eye on this sectors by using monetary policies are a weapon of control.  Monetary policies are directives, guidelines, or order issued to the player in the money markets by the government.           In Nigeria, the Central bank of Nigeria (CBN) is the highest organ used by the Federal Government to control the economy.  The CBN was established to perform this duty and to creates money to influences economics activities and achieve economics objectives of the government.  The pursuance of this objectives gives to Central Banking and Monetary regulation in Nigeria.  The CBN is the highest bank or known as the apex bank.           This position it is occupying make it possible to regulates direct and control economics activities fro both the government and private sector.  Much of government activities may lead to high spending of money which may also lead to inflation. Inflation does a lot of damage to the economy.  It weaken the economy because it reduces the values of the currency. It makes the cost of goods and services very high.  It affects planning and dis-encourage investment etc.           The Central bank start it function on the economy by first of all licensing the commercial bank and playing supervisory role for all other player in the money market.           This is to makes sure that he aims monetary regulation in Nigeria is ascertained.               1.1     BACKGROUND OF THE STUDY           The Central Bank of Nigeria (CBN).  The Institution that perform the Central Banking function for Nigeria is called Central Banking of Nigeria.  In this section, I shall briefly discuss the background to it’s establishment, it’s organizational structure, it’s operational modalities, and financial statement.   BACKGROUND TO THE ESTABLSHMENT OF THE CENTRAL BANK OF NIGERIA           Like the case in many countries, Commercial Banking started in Nigeria long before the Central bank was established, where as the trust commercial bank branch was established in Nigeria as far back as 1892, it was only in 1953 “6 years later” that Central bank of Nigeria was established by Central Bank of Nigeria Act of July 1959 with an authorized capital of N1.5m of which N1.25m was paid up.           Prior to the establishment of the Central bank of Nigeria, the role of a Central bank was performed by the West African Currency Board, which was established by British Government in 1912. This body was established to perform the primary role of issuing a West African Currency in all the five countries that were British Colonies.           In the year 1952 a motion was moved in the National Assembly for the establishment of Central Bank of Nigeria.  Following the insistence of Nigeria political leader on developing of Central Bank for the country, J.L. Fisher, a financial expert of the Bank of England was appointed to investigate the desirability and practicability of instituting such Bank.  Fisher recommended, the establishment of an issuing bank.  His recommendation was rejected.           A team of World Bank carried out another investigation in the year 1955 and recommended a State Bank of Nigeria endowed with power of Modern Central Bank.  Their recommendation were not implemented.           It was the 1957 report of J.B Loynes of the Bank of England that pared way for the establishment of the Central Bank of Nigeria.  The Central Bank of Nigeria Act was passed on 15th May, 1958.             ORGANISATIONAL STRUCTURE OF THE CENTRAL BANK OF NIGERIA A.      BOARD OF DIRECTORS           It is the highest policy making organ of the Central Bank of Nigeria.  The Board is presided over by the Governor of the Central Bank of Nigeria.  The member are appointed by the presidency.   B.      COMMITTEE OF GOVERNOR           The committee is charged with the daily administration of the Bank.  It is headed by the Governor of the Central Bank of Nigeria. Other member of the committee are: - DEPUTY GOVERNOR -        Domestic Monetary and banking Policy DEPUTY GOVERNOR -        General Administrations DEPUTY GOVERNOR -        Domestic Operations DEPUTY GOVERNOR -        Internal Operations DEPUTY GOVERNOR -        Management Services   C.      PRINCIPAL OFFICERS OF THE BANK           The major division of the Central bank of Nigeria are headed by some principals officers of the Bank referred as to as directors. Director of Agricultural Finance Director of Administration Director of Research Director of Foreign Operations Director of Currency Operation Director of Banking Supervision Director of Finance and Account Director of Banking Operation Director of Security Services Director of Internal Audit Director of Personnel Director of International Economic Relation Director of Trade and Exchange Director of Building and Engineering Services Director of Computer Services Director of Branch Operation   D.      DEPARTMENT CHIEF           These are the principal officers of the bank that are referred to as Departmental Chief.  They are in charge of certain operational unit of the bank. They are: The Chief Bank Examiner The Chief Research officer The Chief of Agric Credit Officers The Chief Medical Superintendent The Chief of Foreign Operation   E.      HEAD OF AUTONOMOUS UNITS           These are the officers that report directly to the office of Governor of Central Bank of Nigeria.  These officer are: - The Deputy Director Operation and Management The Deputy Director Legal Affairs   F.      ZONAL CONTROLLERS           The Central Bank of Nigeria has some zonal officer that are under the Central Zonal Controller Zonal Controller   -        Ibadan Zonal Controller   -        Kano Zonal Controller   -        Enugu Zonal Controller   -        Bauchi        Zonal Controller   -        Abuja   Balance sheet of Central bank of Nigeria.           The balance sheet of the Central Bank of Nigeria is a statement showing the Asset and Liabilities of the Bank as at data: Typical Balance Sheet of Central Bank of Nigeria Assets                                                                                      N Gold                                                                                         xx CONVERTIBLE CURRENCIES Foreign Government Securities                             And Balance with Foreign Bank                                              xx IMF Gold Tranche                                                                   x Special Drawing Right                                                    x                    Total External Reserve                                                 xxx Federal Government Securities                                       xx Others Securities                                                             xx Rediscount and Advances                                                        xx Other Asset                                                                     xx                                                                                                 xxx LIABILITIES Capital Subscribes and paid up                                       xx General Reserve                                                                       xx Currency in Circulation                                                  xxx   DEPOSIT Federal Government                                                                 xx State Government                                                           xx Banker                                                                                     xx Other                                                                              xx Other Liabilities                                                              xxx                                                                                                 xxx   1.2            STATEMENT OF PROBLEM In this section, the researcher focused on the prevalent problem that has led to Central Banking and Monetary Regulation in Nigeria.  These problem militating against the Central bank of Nigeria are as follow: (A)           Poor Banking function (B)            Lack of Monetary regulation and control functions (C)            Poor International Operation Function (D)           Lack Debt Regulation and Control Functions (E)            Lack of other Development Functions   1.3            SCOPE OF STUDY Ina study of this nature, one would like to accumulate data from many areas. But, in view of length of time allowed for this research such a wide range sample study was almost external difficult.  The researcher or therefore, concentrated has field work in Enugu metropolis.  The choice of Enugu metropolis was based on the time factor allowed and upon practical consideration including the fact that the researcher knows almost everything about Enugu metropolis   1.4            OBJECTIVES OF STUDY (1)             To find out the role of central banking and monetary regulation in improving Nigeria economy. (2)             To find out problem facing Central banking and monetary regulation in Nigeria. (3)             To find out the central Banking and monetary regulation’s role toward protection of fund in the country. (4)             To find out whether the standard of central has fallen in recent year. (5)             To find out the effectiveness of Central banking and monetary regulation report and implantation.   1.5            LIMITATION Besides, there were many other problem that stamped up during the research work in which some of them are as follows: - FINANCIAL CONSTRAINT: As a student there was not enough capital to spend in transport and fact finding and borrowing of necessary literature that would have helped in the writing of this research work.   MANAGEMENT CONSTRAINT:  The respondents, especially the Zonal Controller – Enugu did  not co-operate as was expected.  Also the workers in the different department visited were as well reluctant in answering some of the question asked.           All this problem not withstanding did not prevent the continuation of the research work.   1.6            DEFINITION OF TERM CBN  -        Central Bank of Nigeria   M2              -        Quantity of Money in Circulation   Player          -       Securities and Exchange Commission (SEC)                    Nigeria Stock exchange (NEC), Issuing Houses, Merchant Bank, Commercial Bank and Non-Bank Financial Institution, Bureau de Changes                       Money/Capital Market    -        Call money, Commercial papers stabilization Security, T.B, etc.           OMO          -        Open Market Operation ; involves the selling of government short team securities to public.             C.R.R         -        Cash reserve Requirement, CBN gives directives to commercial and other institution to increase the amount in their deposit account.             Liquidity Ratio      -        The percentage of Bank deposit which must be maintained as liquid asset in CBN   1.7            SIGNIFICANCE OF THE STUDY The significance of the study offer relevant information about the role of central bank in development of money market, which will turn contribute immensely to economic development.           Since we all know the central bank issue of currency, banker to other banks, banker to the government, lender of last result clearly and collection of cheques and other instrument, it becomes clearly that every individual should master the role of central bank in money market.   1.8            DEFINITION OF TERM Central Bank:  It is the apex financial institution which manages in the cost of money, the volume of money available within he economy, the direction of money and credit how in the same economy with a view to realize the designed monetary and credit objectives. M2              -        Quantity of Money in Circulation   Player          -       Securities and Exchange Commission (SEC)                    Nigeria Stock exchange (NEC), Issuing Houses, Merchant Bank, Commercial Bank and Non-Bank Financial Institution, Bureau de Changes           Money/Capital Market    -        Call money, Commercial papers stabilization Security, T.B, etc.                     OMO          -        Open Market Operation ; involves the selling of government short team securities to public.             C.R.R         -        Cash reserve Requirement, CBN gives directives to commercial and other institution to increase the amount in their deposit account.             Liquidity Ratio      -        The percentage of Bank deposit which must be maintained as liquid asset in CBN Get the Complete Project Material Now!!!