Banking – Central Bank of Nigeria
Central Bank is the only financial institution established and charged with the day-to-day management and control of the nation’s monetary affairs, the supervision and coordination of banking and financial activities of the country. Every country has a central bank and its motive is not to make a profit, but to carry out the major financial operations of the central government of the country. With the dissolution of the West Africa currency Board (WACB) which served the four British colonies of Nigeria, Ghana, Sierra Leone, and Gambia as central Bank. Nigeria established her own central bank in 1958.
Functions of Central Bank of Nigeria
1. Federal Government Banker: it keeps the country’s money.
2. Banker’s Bank: All the commercial banks in the country keep their money with the central bank and if they have a shortage of fund, they go to the central bank for money
3. Agent to the Federal Government: It makes payments, settles debts, and receives money on behalf of the government.
4. Issue currency: the central bank has the sole authority to issue the nation’s currency.
5. Lender of last resort: Commercial banks run to the central bank to borrow money anytime they run short of money.
6. Regulation of the economy: It performs this function through various methods like maintaining equilibrium balance of payments, stabilizing the value of the local currency, preventing inflation and deflation, etc.
7. Advice to commercial banks: It helps to avert bank crisis in the country.
8. Control the activities of commercial banks: The bank supervises and assists the activities of the commercial banks through the open market operation, cash ratio, credit control, liquidity ratio, etc
9. Control the foreign exchange reserves: It issues foreign exchange to those who are in need of it. They know when the excess foreign exchange has been issued and how to control it.
10. Advice to government: The bank advises the government on the financial situation of the country, on how to manage the national debt on budget formulation, etc.