MONETARY POLICIES AS EFFICIENT TOOLS FOR ECONOMIC DEVELOPMENT
ABSTRACT
In all the development countries in the word, it was through their good implementation of monetary policy control that their monetary control and supply of money was well manage and implemented very well. Basic on my own view I believed that the monetary authority in our country will do better to achieved the in goal is they do not mis-led the good involve they have started. I also believed from the little that has be done since they started 1962. They have be some improvement in the system, some of this system are. The economic growth which the standard of living has been some improvement and the environment has grow. More also, the relative stability in the domest prices and double inflation which they have restrain to a digir. The balance of payment has been maintained at equilibrium and exchange rare has also been stable. The need for monetary policies in a developing economy like Nigeria cannot be over-emphasized for monetary management and for the regulation and development of the financial system of an economy. Monetary policies are implemented through the banking sector to which the guidelines are directed. The essence of having monetary policies put in place is hardly appreciated by all stack holders (government, banks, other financial institution business enterprises and individuals) given the degree of non-compliance to the stipulated measure which has caused much economic set-back in the past. The Nigeria economy has experienced periods of economic “boom or depression” at various stages of its developments prior to the establishment of the Central Bank of Nigeria (C.B.N) in 1959 and up to 1962 there was no specific monetary management policy in place. The Nigeria economy did not achieve a significant increase in economic growth because the Colonial British system being operated by the West African Currency Board (WACB) had no room for the development of the local economy. In 1962, the Central Bank of Nigeria (CBN) tools a decisive step to adopt the monetary policy objectives as contained in the first national development plan in order to re-direct the focus of the Nigeria government to suit the need of the local economy. By using monetary policies to initiate development programme for the economy, the C.N. al intended to involve all sectors of the economy in participating in economic activities that will lead the country to a substable economic development. The policy measures taken by the C.B.N to open up the Nigeria economy involved among other thing, the control of money supply and credit conditions. The implementation of the country’s monetary policies over the year had led to a remarkable increase in economic activities as observed in the appreciable increase in the growth of the productive seasons of the economy. The overall effect is that there is a positive change in the country’s economic growth informs of Nigeria and (C.B.N) is still among accounts in making Nigeria move stable so as to achieved relative economic growth and development. Although monetary policies are the cone tools for addressing the economic problems of a nation, using monetary policies in isolation could be couner productive monetary policies are used along with other measures and fiscal policies to ensure that the set-objectives are achieved for the attainment of sustainable economic growth and economic stability.
CHAPTER ONE
INTRODUCTION
1.1 STATEMENT OF THE PROBLEM AND PURPOSE OF THE STUDY
This research work or study is designed to describe now monetary policy could serve as an efficient tools for economic development.
THE PURPOSE OF THE STUDY
1. To describe how monetary policy have helped in identifying the economic problems of the country and offer lasting solutions to it.
2. To ensure that reduction in cost of borrowing for private sector investors by reducing interest rate and government expenditure, thereby improving capacity utilization and output growth in our economy.
3. To ensure stable prices by maintaining inflation rate at a single-digit, sustaining exchange rate and excess growth in aggregate liquidity.
4. To improve the lower single digit inflation by the two year period by (C.B.N) payment system and orderly behaviour of the operators in financial markers for effective control.
5. To promote the broad measure of money supply (Mz) which continue to be the intermediate target of monetary policy in order to minimize the negative effects on domestic price and exchange rate and improvement on employment opportunities.
1.2 BACKGROUND OF THE STUDY
Over the years the objectives of monetary policy have remained the attainment of internal and external balance. However, the emphasis on techniques and instruments to achieve those objective changes from time to time in the economy. The growth of commerce and industry which lead to rise in money circulation in the economy has made the Central Bank of Nigeria increasingly interested in making an effort to have these money supply and credit conditions controlled so as to maintain relative economic stability.
The cases of Nigeria, there have been a lot of depressions in the country. During the period of boom in Nigeria was at its peak in 1974. The excess liquidity in the system during the period created its own problem. The resultant inflationary pressures at the time had remained one of the major economic problems of success governments in Nigeria. The periods of depression were particularly noticed in Late 1970’s, all through 1980’s and early 1990’s for diverse reasons which affected the economy adversely, whatever the state of the economy, the Central Bank of Nigeria had relied on monetary policies to address the economic problems according to the prevailing circumstances.
Morealso, the Central Bank of Nigeria has map-over a two-year period programme for control of inflation to a single-digit instead of the double-digit instead of the double-digit like in the year 1994’s 1993 etc the secure of unemployment opportunities and government expenditures. Therefore, to increase the targeted economic growth and levels of other economic development by the used of monetary policies. The monetary authorities (C.B.N) continued to make effort in seeing that the targeted will be achieved in our economy. Finally, indeed, the monetary policy direct the monetary spending on economy so that a high degree of growth and stable economic activities will be achieved and there will be efficient tools for economic development.
1.3 RATIONALE OF THE STUDY
The aim of this research work or study was done to intended the importance’s of monetary policy in our developing country. If the monetary authorities (C.B.N) and government to enhance more on this study to the public will help to achieve the relative economic growth and development. It will enable the authorities to ascertain how effective they have been in making the conditions of the rural areas fair. More also, it will pay a very vital roll in increase of employment opportunity, creating a suitable economic balance of payment in foreign market and good standard of living in our country.
1.4 SIGNIFICANCE OF THE STUDY
The monetary policy cannot be over-emphasized in the management of the economy. This study will server as a great important to the societies, individuals, banking system, and relative economic stability. For instance this study will help.
1. To fulfill the requirement for the award of Ordinary National Diploma (OND) Certificate in institution of management and Technology (I.M.T) Enugu.
2. It will help the financial researcher for judgment and for making reasonable decisions and how to implement such policies for good development and growth in the economy.
3. It will guides the Central Bank of Nigeria and government on how to control the economy in circulation (inflation) or shortage of money in circulation (deflation) instead the economy target and price control is stable and maintained.
4. It will bring up the inevitable need to apply the tools and to the areas it will be useful to the countries in control of economic money supply and economic development depression.
1.6 DEFINITION OF TERMS
Here, the definition will be brief but will be further and fully be defined in the next chapter.
MONETARY POLICY: This can be defined as a package of measures or action taken by the monetary authorities to regulate the terms and conditions under which money and credit are provided to the economy. The measures are taken in a way that monetary expansion is kept at a pace consistent with the level of economic activity and in consonance with general macroeconomic stability.
ECONOMIC STABILITY: This can be defined as a suitable price level devoid of sharp increase and decrease in the movement of economic stability includes price stability and full employment.
ECONOMIC GROWTH: This is refers as the process whereby the real per-capital income of a country increase over a long period of time. The economic growth is measure in amount of increase in both goods and service produce in an economy.
ECONOMIC DEVELOPMENT: This is defined to as sustained rise in the real Gross National Product across many periods.
