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There are so many things that to know about the operations and activities of the CBN.
The CBN is a fully autonomous body, performing its functions with the objective of promoting stability and continuity in economic management.
In other cases identified as the federal reserve bank, the CBN was established for four major tasks; monetary policy, currency management, development finance, control of payment systems.
The origin of the CBN and the federal reserve
The origin of the CBN dates back to the time of the G.D Paton report of 1892 – 1952 when the colonial administration opened an investigation into the banking practice in Nigeria.
This was also in the middle of a series of financial evasions in Nigeria. Consequently, the report helped chart the first Banking Ordinance of 1952.
- The CBN directs banks to set up FX sales points for travel allowances, others
- CBN cancels capital deposit transfer for BDC licence applications
- CBN – $35 billion foreign reserves will cover seven months of import
What does the CBN do?
Typically, the ordinance controls commercial banking and prevents the establishment of unviable banks. These are things to know about the Central Bank of Nigeria, CBN.
Monetary Policy
The CBN makes the monetary policy that facilitates the realisation of price stability and supports the economic policy of the Federal Government.
The CBN drafts and implements certain procedures that can control the money supply in Nigeria. These policies further promote sustainable economic growth and achievements in the country.
All economic conditions in the country are taken into account by the CBN when making monetary policy.
Currency management
The authority to print naira notes and coins by the Nigerian Security Printing and Minting Plc (NSPM) Plc is issued only by the CBN.
There are also other overseas printing/minting companies with the authority of the CBN to print the naira.
The CBN maintains an office called Mint Inspectorate in the premises of the NSPM Plc to maintain the security and quality of Naira notes and coins.
Current amount of naira in circulation as of June 30 2021 – N2,741,262
Development finance
The Central Bank of Nigeria has a development finance initiative that targets the agriculture sector and MSMEs.
It provides risk capital for economic development schemes on investment grounds.
Payment system
The payments system is the main channel through which financial resources flow from one segment of the economy to the other.
There are governments policies that control the payment system in Nigeria.
The CBN federal reserve system – things to know
The federal reserve approach of the CBN is the structure that guarantees that the bank has assets in foreign currencies.
Most countries employ foreign reserves for making monetary policies but it is most useful when liabilities hit.
The federal reserve system constitutes all the functions mentioned earlier but also the provision of financial advice to the federal government and regulation of banks in Nigeria.
