CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
According to Adekanya F. (2009), The first bank, bank of British west Africa (BBWA) was incorporated in march 1893 known today as the first bank of Nigerian plc. This was follows by colonial bank (1917) taking over by the Barclays bank in 1925 now called the union bank of Nigerian plc. The third foreign owned bank established in 1948 was the British and French bank known today as United bank of Africa. Between 1892 and 1952 a member of extertriates and indigenous banks were established most of which failed. This mass failure was caused by the fee for all native of banking, inefficient supervision. And above all, inadequate capital based.
He further stated that The west African currency bank’s (WACB) primary responsibility was to issue African currency which was kept at a fixed party with British pound. This means that the board can neither engage in direct monitory management, nor promote the growth of the nations financial market. To address this problem and coupled with failure of most commercial banks in the country, the Central bank of Nigeria (CBN) was setup in 1959. Before establishing the Central bank of Nigeria in 1959, three studies were carried out by three scholars namely J.I. Fisher’s report in 1953, I.B.R.B Mission’s report in 1955 and J.B Loyne’s report in 1957. Ade T.O. (2010), reported that it was not flexible to establish a central bank on the grands that the financial environment did not exist and that it would be impossible to find the local sta to manage the bank. In his own report, international bank for reconstruction and development (IBRD) recommended a state bank of Nigeria to take over the banking control functions of the financial secretary hitherto was vested with the power of controlling banking operations in the country. Following, the banking operations in the early 1960s. J.B Lonyne’s report of 1957 supported the establishment of a Central bank of Nigeria which resulted in the promulgation of the Central bank of Nigeria in ordinance of 17th march, 1958. This is the enactment of the 1952 banking ordinance and the subsequent establishment of the CBN in 1959 brought sanity to the shaotic banking environment that peceded it. The 1952 banking ordinance stipulated that prospective banking business must be registered and licensed. The Central bank of Nigeria started banking operations on 1st July 1959 with an initial capital of 1.9m of which N1.25m was paid up. The Central bank of Nigeria act as under gone various amendments and the current banking for its functions it provided by the Central bank of Nigeria decree No. 20 for 20th June 1991.
1.2 STATEMENT OF PROBLEM
This study titled “the role of Central bank of Nigeria in the growth of Nigerian economy” attempt to find out the part played by the Central bank of Nigeria in her economic emancipation. The research went further on to determine the functions of Central bank of Nigeria as it relates to economic development and how instability in the surpass of money in a given economy is controlled. Some of the problems facing the Central bank in the nation’s growth are the application of the financial policy instrument such as the open market operation (OMO) minimum reserve requirement, moral suasion, direct control, direct regulation of interest rate, discount rate system and lots more.