Objectives of monetary policy in Nigeria

Objectives of monetary policy in Nigeria

The monetary policy in Nigeria is one of the primary concerns for the Nigerian society. It does not work! That`s the biggest problem! Out experts will give you an overview of monetary policy in Nigeria and why it does not work.

Exchange Stability

Top objectives of monetary policy in Nigeria that does not work!

Top objectives of monetary policy in Nigeria that does not work!

Monetary Policy in Nigeria does not work properly as it can`t provide its main objectives. These objectives are connected with the availability of money in the market. Still, the CBN can`t provide a stable money system. Let`s take a look at what they do wrong!

1. Neutrality of Money

Neutrality of Money

Neutrality of money is the primary objective to be achieved by monetary policy and Nigerian economy. According to the views of experts, Nigeria should illuminate the currency change in the country. It`s the root of any fluctuation.

The neutral Monetary policy can help to avoid trade cycles and money inflation. Therefore, Nigeria will exterminate the bank element in the deflation of economy. The monetary authorities will be able to neutralize any deviation in the economy with the neutral money policy.

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If Nigeria implements this monetary policy, then it may help to stabilize consumption economy.

2. Exchange Stability

Exchange Stability

It`s one of the main problems for monetary policy and Nigerian economy. Exchange policy is not stable in Nigeria. In this country, you can witness what is called the “double exchange rate”. The Federal Government of Nigeria can`t deny that the bank players secretly sell dollars on the black market. Therefore, the CBN gives its dollar price and the black market provides another rate.

Experts are worried about this double exchange rate in Nigeria. It does not the help Nigerian economy at all. They can give only one advice to Nigeria. It`s to set the Naira free. It will stabilize the overall economy of Nigeria.

3. Price Stability

Price Stability

It`s the main objective of any monetary policy. Unfortunately, due to inflation and double exchange rate, it`s difficult to regulate the prices. Economists have proven the value of price stability in the 1930s. During the American Depression, it was necessary to create a stable market.

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Nigeria can learn from the mistakes of the American economy of the 1930s. It means that the Federal Government together with the CBN should implement the price stability in the market. One of the ways for that is to provide a new loan and tax policy. It will help the small businesses to stay in the market and even grow.

4. Full Employment

Full Employment

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Another monetary policy of the country that does not work today is employment. According to the economists, an healthy rate of unemployment in a country should not exceed 5%. The official statistic in Nigeria informs that the level of unemployment in Nigeria is at least 12%. Therefore, Nigeria loses about 15-18% of its GDP due to the unemployment.

President Buhari has implemented new strategies to fight unemployment rates in Nigeria. Nevertheless, these new policies do not change the whole picture of problem for now. The most troubled situation is the level of unemployment amongst youth.

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5. Economic Growth

Economic Growth

The monetary policy in Nigeria includes economic growth. Still, according to financial analytics, Nigeria has been in the recession for the last year. It is only in the second quarter of 2017 that analytics can see signs of recovery. Still, it`s a long way from the full recovery.

Nigeria has a lot of problems that creates drawbacks to the economy. One of them is terrorism. Boko Haram and Niger Delta Avengers will continue to threaten the economic stability. Another issue is the high corruption rates. Nigeria can`t achieve great success without dealing with these two problems.

6. Balanced payment

Balanced payment

Monetary policy and Nigeria economy can`t exist without equilibrium when it comes to payments. The monetary authorities should make all efforts so that the payments will be equal for citizens. If it`s not going to happen in the coming years, then Nigeria will lose several million people. They will try to find better opportunities in other countries with better and equal payments.

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A stable payment system is needed for the Nigerian economy. With no balance, it will be difficult to maintain stability and public order in the country.

Conclusion to an overview of monetary policy in Nigeria

Conclusion to an overview of monetary policy in Nigeria

Nigeria is one of the biggest countries in Africa. It has a great potential to become the greatest power in Africa. However, the right monetary policy will help to increase the chances of the country becoming one of the most successful economies in the world!

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Source: Legit.ng

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