Mention and explain five functions performed by the Central Bank of Nigeria showing how they...
Mention and explain five functions performed by the Central Bank of Nigeria showing how they facilitate commercial activities.
Explanation
Functions of Central Bank of Nigeria are:
(i) Lender of last resort: Commercial banks borrow money from the central bank in times of difficulty.
(ii) Banker to the government: The central bank acts as an agent and banker to the government. It borrows for the government through treasury bills, etc.
(iii) Bankers' bank: Every commercial bank has an account with the central bank which comprises its legal reserve.
(iv) Issuance of currency: The central bank controls the issue of currency notes and coins and protects the gold reserve.
(v) Maintenance of external reserves: It manages the foreign exchange system of a country.
(vi) Regulation of the economy of the country: The central bank maintains equilibrium balance of payments and prevents inflation and deflation.