THE EFFECTIVENESS OF CBN CONTROL MECHANISMS IN THE BANKING SYSTEM

THE EFFECTIVENESS OF CBN CONTROL MECHANISMS IN THE BANKING SYSTEM

CHAPTER ONE

INTRODUCTION

Background of The Study

Prior to the establishment of the Central Bank of Nigeria (CBN), the West Africa Currency Board (WACB) which was established in 1912 had the responsibility for issuing legal tender currency.

Specifically, it was charged with the issue of a West African Currency, the exchange of existing currencies and the investment of reserves. The reserves were invested in Britain and this in a way hindered development in Nigeria. However, because the WACB was linked automatically to the British system, it could not engage in monetary management the effectiveness of cbn control mechanisms in the banking system neither was Nigerians trained in the act of monetary management. In order to eliminate this deficiency and thereby promote the growth of the domestic money and capital markets, the Central Bank of Nigeria was established in 1958 and it commenced business on 1st July, 1959.

THE EFFECTIVENESS OF CBN CONTROL MECHANISMS IN THE BANKING SYSTEM