The mandatory special deposits are a major measure in reducing the deposits available for banks to lend to their customers.
The CBN is also empowered by the two enabling laws, to direct the banks and other financial institutions to carry out certain duties in pursuit of the approved monetary policy.
When banks are required to hold more liquid assets in reserve, fewer assets will be left for them to lend to the general public. In practice, as previously noted, monetary policy makers do not have up-to-the-minute information on the state of the economy and prices. When they believe they need more cash than they have on hand, banks can make requests for cash with the Federal Reserve.
Monetary theory suggests that different monetary polices can benefit nations depending on their unique set of resources and limitations.
However, monetary policy can be expansionary or contractionary. Therefore, the convertibility of naira, the relaxation of the control on remittance of profits and technical fees and the abrogation of the Exchange Control Act of and the Nigerian Enterprises Promotion Decree of as spelt out in Budget are the kind of reforms that can promote the inflow of foreign direct investment a politically stable environment is also of immense importance.
Commercial banks are required to keep some reserves with the Central Bank. The matter is further complicated by the difficulties in forecasting money demand and fiscal pressure to levy the inflation tax by expanding the base rapidly.
The Bank of England exemplifies both these trends. The extent to which this level of development and growth are attained depends upon the resource available to the country. Under the tap system of selling government securities whereby the price and not the quality of these securities was fixed there was very little risk of capital losses.
According to Austrian economics, without government intervention, interest rates will always be an equilibrium between the time-preferences of borrowers and savers, and this equilibrium is simply distorted by government intervention.
But the decree or any exchange control policy that has the potential to discourage foreign investment will not be relevant under the present economic dispensations. Useful information is limited not only by lags in the collection and availability of key data but also by later revisions, which can alter the picture considerably.
The contractionary monetary policy can slow the economic growth and increase unemployment, but is often required to tame inflation. Achieving economic growth is desirable to every growing economy. Selling government debt pulls the money out of the market, and eventually leads to tightening of money supply.
Commercial banks are required to keep some reserves with the Central Bank.uring the effectiveness of its monetary policy. Keywords: Money Supply; Inflation; Development country like Nigeria where deficit spending has become a by using quarterly data.
Significant statistical evidence obtained from the analysis showed strong rela-tionships between increases in net current expenditure and growth in. Ordinary Least Square Method (OLS) is used to analyse the data between and The result of the analysis shows that monetary policy represented by money supply exerts a positive impact on GDP growth but Examine the effect of monetary policy on inflation in Nigeria.
BibMe Free Bibliography & Citation Maker - MLA, APA, Chicago, Harvard. The Economic Development of Nigeria from to Okechukwu Effoduh Introduction There is a common Igbo1 proverb that says: No elephant is burdened by the weight of its tusks.2 The current economic problem in our nation is often lamented and cursed as.
Monetary policy is the process by which the monetary authority of a country, typically the central bank or currency board, controls either the cost of very short-term borrowing or the monetary base, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
Further goals of a monetary policy are usually to contribute to the stability of. Monetary policy is the process by which the monetary authority of a country, typically the central bank or currency board, controls either the cost of very short-term borrowing or the monetary base, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
Further goals of a monetary policy are usually to contribute to the stability of.Download