Accounting technicians scheme west africa
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- Roles of Central Bank
| (a) Central Bank A central bank is the open national financial institution given privileged control over the production and distribution of legal tender money, credit fora nation or a group of nations entrusted with the custody of cash reserve and out as lender of last resort. In modern economies, the central bank is usually responsible for the formulation of monetary policy, the regulation of banking industry, and provision of financial services, including economic research. Its goals are to stabilize the nation's currency, keep unemployment low, and prevent inflation. Examples of Central banks are Bank of Ghana, Central Bank of the Gambia, Cnetral Bank of Nigeria, The Central Bank of West African States (French Banque Centrale des tats de l'Afrique de l'Ouest, BCEAO) is a central bank serving the eight West African countries which share the common West African CFA franc currency and comprise the West African Economic and Monetary Union (UEMOA). Objectives of Central Bank According to the Central bank of Nigeria (CBN) ordinance of 1958 (This can be applicable to other Central Banks in West Africa, the following are it objectives a) To issues legal tender currency in Nigeria. b) To maintain external reserve in order to safeguard the international value of the currency. c) To promote monetary stability and strong financial structured) To act as banker and financial adviser to the federal government. Roles of Central Bank One of the main tools of any central bank is setting interest rates – the cost of money – as part of its monetary policy. Most central banks do not engage in retailing banking and an individual cannot open an account or ask for credit facilities/loans. It acts as a bank for the deposit money banks and this is how it influences the flow of money and credit in the economy to achieve stable prices. Commercial banks can turn to the central bank to borrow money, usually to cover very short-term needs. The main activity of most central banks is tied to liquidity management, which involves the routine control of the level of money supply in the system in order to minimize fluctuations in banks reserve balances. Periodically, the Central Bank determines target growth rates of money supply, which are compatible with overall policy goals. It also seeks to align commercial and merchant banking activities with the overall target. |