The evolution and appraisal of open market operations as an instrument of monetary policy in Nigeria

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Periodical article

Title:	The evolution and appraisal of open market operations as an instrument of monetary policy in Nigeria
Author:	Ojo, M.O.
Year:	1999
Periodical:	The Nigerian Journal of Economic and Social Studies
Volume:	41
Issue:	1
Pages:	1-30
Language:	English
Geographic term:	Nigeria
Subjects:	central banks monetary policy
Abstract:	The aim of this paper is to assess the efficacy of the open market operations of the Central Bank of Nigeria as an instrument of money management. It analyses the movements in open market transaction and changes in the portfolio of treasury bill holdings of the CBN and other financial institutions. The initial application of the instrument was quite successful, resulting in the sale of large volumes of securities and consequent decline in the portfolio of CBN's holdings of government securities. These trends were reversed in the latter part of the review period owing in large part to the changing economic policy environment. The open market operations of the CBN failed to keep the base money (the operating variable) and money supply within its established targets. This failure and the inadequate depth of the financial market resulted in large fiscal deficits of the federal government financed by CBN credit. The implications of the review include the need to maintain a stable macroeconomic environment and for the CBN to have the discretionary power to apply the instrument in a more proactive manner. Bibliogr., sum. [Journal abstract]