Discuss FIVE functions of the central bank of Nigeria (CBN) – NABTEB QUESTION

Functions of the central bank of Nigeria:

(i) Issuing of currency: It is the only authority empowered to issue coins and currency notes in the country. It also circulates them through other banks.

(ii) The government’s bank: It is responsible for the banking of the government revenues. It also lends money to the government when the need arises.

(iii) The banker’s bank: It is the banker to all commercial banks in the country. All commercial banks have account with it.

(iv) Manages national debts: It is responsible for paying interest on external and internal loans. It is in charge of loans repayments and debt rescheduling.

(v) It is the lender of last resort: It acts as lender to commercial banks and other financial institutions in a period when there is a high demand of money from customers.

(vi) Implements government policies: It controls inflation when necessary through implementation of government fiscal and monetary policies

(vii) Foreign exchange: It controls the foreign exchange of the country especially when the country is faced with balance of payment problems

(viii) Controls commercial banks: The central bank controls the credit policy of the commercial banks through the use of any of these methods- Moral situation, the open market operation, the bank rate and special directives.

(ix) Represents the nation in international monetary conferences, World Bank, IMF, etc.