BANKING

CONTENT

1. Origin of Central Bank of Nigeria
2. Function of Central Bank of Nigeria
3. How the Central Bank Controls the Commercial Banks

Origin of the Central Bank Nigeria

The central bank is the monetary authority of a country, government bank and banker’s bank. It issues legal tender, controls the volume of cash reserves with commercial banks.

Before independence, the West African Currency Board was the highest financial institution which performed the functions of the central bank. The board controlled the issue of currency in the member countries. After independence, the countries set up their central banks to ensure rapid economic development.

The Central Bank of Nigeria was established by the Central Bank Act of 1958 and started operation on July 1^st 1959. However, 1892-1952, there was an enquiry by the then colonial administration to investigate banking practice in Nigeria. The G.D. Paton Report, which emanated from the enquiry, was the basis for the first Banking Ordinance of 1952. The ordinance was designed to ensure orderly commercial banking and to prevent the establishment of unviable banks.