CHAPTER ONE

INTRODUCTION

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.

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.

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.

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.

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 interest in making an effort to have these money supply and credit conditions controlled so as to maintain relative economic stability.

The case of Nigeria, there have been a lot of depression 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 inflation any pressures at the time had remained one of the major economic problems of successive government in Nigeria.  The periods of depression were particularly noticed in Late 1970’s 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 problem according to the prevailing circumstances.

More also, the Central Bank of Nigeria has map out a two-years period programme for control of inflation to a single-digit instead of the double-digit like in the previous years.  Therefore, to increase the targeted economic growth and level of other economic development by used of monetary policies.  The monetary authorities (C.B.N) continued to make effort in seeing that the target 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.