Many authors that have attained greater heights in
academics have continued to contribute to the growing literature on monetary
policy. Ojo (1992) stated the objectives of
monetary policy from an integral part of the overall macroeconomic objectives
of a country such as maintenance of external equilibrium, but that the pursuit
of the objectives most of the time bring about conflict with one another. For
instance, the stimulation of employment conflicts with price stability as both
of them more in opposite directions. And also when money supply is restricted
in order to slow down inflation if not well monitored, it may result to
unemployment in the nation.
Onwukwe (2003) says that monetary
policy can be defined as the deliberate control (or regulation) of money supply
and/or rates of interest by the Central Bank to try to effect a change in
employment, inflation or balance of payment. He noticed that monetary policy by
controlling interest rates, could effect changes in the capital account of a
country’s balance of payment since relatively higher rate of interest in one
country will attract fund from other countries in the short run. He concluded
by saying that monetary policy and fiscal policy are among the approaches to
achieve economic growth.
Monetary policy according to Iyoha
(2004) is an attempt to achieve the national economic goals of full employment
without inflation, rapid economic growth and balance of payment equilibrium
through the control of the economy’s supply of money and credit.
Obinna (2008) says that monetary
authorities can influence the value of money in a number of ways: first, they
can alter the mint parity that exist thereby changing the official value of the
currency in circulation. Secondly, they can introduce a policy of exchange
control whereby the values of money of domestic currency can remain the same
while the values of monetary units of major trading parlous fluctuates.
Thirdly, they can fake a formal step to set a new and lower official quotations
of the value of home currency in terms of other currencies or gold.
Nwankwo (1979) observed the various
techniques of monetary policy also known as monetary instruments. He separated
them into two: the quantitative and qualitative. The quantitative instrument
includes open market operation, special deposits variations in reserve
requirement, discount rates and stabilization securities while the qualitative
instruments include moral suasion and credit control. Nwankwo also stated, that
not all the monetary policy techniques have been employed in Nigeria. He agreed
that although the performance of commercial banks on credit controls have been
satisfactory, government increased its indebtness to the banking sector though
advances and loans for growth and development.
According to Frenkel, Goldstain and
Mason (1989), P. (187) “The goals of monetary policy are often stated as price
stability, full employment and sustainable economic growth. To these may be
added to the international goal of monetary policy” stable exchange rates and
balance trade. Thus Frenkel, Goldstain and Mason concluded that. “the bottom
line is that price stability is now widely regarded as the principal priority
for monetary policy.
According to the Central Bank of
Nigeria, the objectives of monetary policy in Nigeria includes: stimulation of
economic growth, promotion of price stability, reduction of pressure on
external sector and the stabilization of the naira exchange rate.
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