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WEEK 10
SUBJECT: COMMERCE
CLASS: SS2
TOPIC: Banking
CONTENT:
- Origin of Central Bank of Nigeria
- Function of Central Bank of Nigeria
- How central bank controls the commercial banks
Sub-topic 1: Origin of Central Bank Nigeria
The central bank is the monetary authority of a country, government bank and banker’s bank. It issues legal tender, controls the volume of cash reserves with commercial banks.
Before independence, the West African Currency Board was the highest financial institution which performed the functions of the central bank. The board controlled the issue of currency in the member countries. After independence, the countries set up their central banks to ensure rapid economic development.
The Central Bank of Nigeria was established by the Central Bank Act of 1958 and started operation on July 1st 1959. However, 1892-1952, there was an enquiry by the then colonial administration to investigate banking practice in Nigeria. The G.D. Paton Report, which emanated from the enquiry, was the basis for the first Banking Ordinance of 1952. The ordinance was designed to ensure orderly commercial banking and to prevent the establishment of unviable banks. In 1957, Mr J.B. Loynes, an official of the Central Bank England was commissioned to advice the colonial masters on the feasibility of establishing the Central Bank of Nigeria. Following the submission of his report, a draft legislation for the establishment of Central Bank of Nigeria was presented to the House of Representatives in March, 1958. The Act was fully implemented on, July 1st 1959, when the Central Bank of Nigeria came into full operations. The Central Bank of Nigeria was statutorily independent of the Federal Government of Nigeria until 1968. The main regulatory objectives of the Central Bank of Nigeria as stated in the CBN Act of 19058 are to issue legal tender, maintain the external reserves of Nigeria, promote monetary stability and a sound financial environment, and act as lender of last resort and adviser to the government of Nigeria.
EVALUATION
- Give a brief history of the central bank of Nigeria
Sub-topic 2: Functions of Central Bank of Nigeria
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