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The objectives of establishing Central Bank of Nigeria were to serve as banker to the banking systems, to perform supervisory role over the commercial banks and issue currency thus requiting the supply of money in the country. It also acts as financial adviser to the government on monetary policies and implements the policy on behalf of the government; it involves issuing legal tender currency, maintaining the value of domestic currency enhancing mobilization of fund.

The Central Bank of Nigeria is government bank, established to keep a country’s financial system under control and this supervision.

The Central Bank of Nigeria is expected particularly in promoting economic growth by fostering the development of money market and capital market, develop banking habits and sound financial system. In order to facilitate economic development, CBN tends to engage in activities, which extend beyond its traditional functions. In this regard, it played a unique role in the development of Nigeria economy. Particularly in promoting agricultural and industrial development in Nigeria.

The Central Bank of Nigeria was established to act as the organ of government that should undertake the major financial operation of the government and by its conduct influence the behaviour of financial institutions so as to support the economic policy of the government. The CBN carries out this responsibility on behalf of the federal government through a process outlined in the Central bank of Nigeria decree 24, 1991 and the banks and other financial institution in formulating monetary policy.

In fact, the roles played by CBN in stabilizing Nigeria economy is enormous one. Since its inception in 1958, it had engaged in one stabilizing one role or the other.



The governments of the Nigeria economy has over the years witnessed serious macro-economics activity, low capacity utilization, growth, unemployment, heavy debt burden, acceleration inflation, intensified exchange rate depreciation as well as high and preserved regime of interest rate, financing has been intensified as a major factor in the observed macro-economic problems. For stability calls for CBN intervention, to ensure confidence in the financial systems.



This project is mainly concerned with the objective of

  • Ascertaining if CBN is actually involved in the stabilization of Nigeria economy.
  • To find out if CBN has control measures over many market and capital market.
  • To identify the instrument used by CBN and its effectiveness in stabilizing the economy.
  • To find out whether the CBN in encountering my problem is its effort to ensure stability in the economy.



In order to perform a base of forming an opinion at the conclusion of this work, the following statement of hypothesis is formed.

Ho:    Central Bank of Nigeria is not involved in the stabilization of the economy.

Hi:     Central Bank is involved in the stabilization of the economy.

Ho:    Central Bank of Nigeria has no control measures over the management of money market and capital market.

Hi:     Central Bank of Nigeria has control measures over the management of money market and capital market.

Ho:    The instrument used by central bank of Nigeria has not been effective in stabilizing the economy.

Hi:     The instrument used by central bank of Nigeria has been effective in stabilizing the economy.

Ho:    Central Bank of Nigeria is not encountering any problem in its effort to stabilize the economy.

Hi:     Central Bank of Nigeria is encountering any problem in its effort to stabilize the economy.



The benefits to be derived from this empirical study can not be over emphasized. The research work is aimed at offering an insight into the roles of Central Bank of Nigeria in stabilizing the economy, it will reveal the adequacy or otherwise of the efforts.

Such results would be used by the apex bank in re-designing an appropriate strategy in its stabilization efforts. It will also be a source of information for educationist and researcher.

This work is also fashioned, to be immense benefits to the entire society, to research students, financialists, journalist and potential investors and indeed the unemployed all stands to benefit from this work.



  1. SCOPE

This study centres on the role of central bank in stabilizing a depressed economy. The role, functions and objectives of CBN will examined. Moreover, the problems of CBN encounters in stabilizing the economy and likely solution will be per fared in this view, the role of Central Bank will be examined from its inception in 1970 – 2002.


It is not easy to carry out this research work due to the death of data as per the problem under study and huge financial burden, also some respondents interviews show apathy in responding to the questions asked. It was this limiting factor retarding the scope of this project. However these limitations not withstanding it, must be asserted that satisfactory efforts were made to ensure that the research was conducted under conditions that created room for scientific valid conclusions.


  1. AFEM: Autonomous foreign exchange market. This is a price directed allocation system, which helps in eliminating the existence of financial dualisms in the foreign exchange from official to black market.
  2. Balance of payment: Where there is a trade, there must be payment either now or later, it is the record of all financial and economic transactions between one country and the rest of the world over a given period of time. It is a record; it could be surplus or deficit.
  3. Depressed Economic: This is characterized by high and increasing unemployment, falling prices and adverse expectation.
  4. De-regulation: It implies allowed economic agents and factors of production to respond to market. Forces the undelaying philosophy of the deregulation of the economy is the belief that the factors of production, goods and services are optionally priced and allocated when their prices are freely determined in a competitive environment.
  5. Direct monetary policy: It involved the use of bank, credit on banks, sartorial allocation of bank credit, interest rate policy and so on, influencing the cost and availability of credits.
  6. Fiscal policy: The use of government expenditure and taxes to influence the level of aggregate economic activity.
  7. Indirect monetary policy: It involved the use of reserve requirement, Open Market Operation (OMO) discount rates, legal ratio and stabilization securities in the financial market to control the cost and availability of credit. In this approach to monetary control, the permissible aggregate credit would continue to be determined by the CBN but mainly for monitoring purposes. It is a measure taken by the monetary authorities to control the cost quantity, the direction of credit to achieve national objectives with effect from September 1st 1992, CBN shifted from direct to indirect monetary control.
  8. Inflation: This is a period of general price of goods and services, it is a situation where too much money in circulation chases few goods.
  9. Micro-economic variables: This among the objective of government formulating monetary policy through CBN such variables as full employment, stability of prices, inflation and so on.
  10. Monetary policy: this is the policy employed by CBN in controlling the supply of money as an instrument for achieving the objective of general economic policy.
  11. Capital market: It is a market for long term capital. It supplies investors with opportunity to borrow and lend money and long term cases.
  12. Share capital: These are shares of the bank held by government institutional investors and the individuals. The shares are issued on nominal values.





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