No money market existed in Nigeria before the establishment of the central bank of Nigeria (CBN) in 1958 via CBN act of 1958. This however not to say that money market for short – term funds did not exist before then. Before the advent of central bank of Nigeria (CBN) and commercial bank, existed some elements of short – term lending and borrowing. 
The market was an integral part of the London money market, it worked by involving funds from London to Nigeria during the season and in order to finance the export produce at the end of the season (Noko, 2011). The market comprising banks and other financial institutions such as discount houses, finance house etc. dealing in monetary assets. These markets have witnessed tremendous changes from start to date informing the numerous amendments of the CBN act to reflect the changing economic circumstances. Being largely responsible for implementing monetary policy in the country under the close watch of the CBN, institutions in the money market through their instruments and operations are the key to a monetary economy such as we have in Nigeria. These have implications for economic growth and development.
            The establishments of central bank of Nigeria as the apex regulatory authority of the financial sector of the country by CBN act of 1958. Although, the apex bank started operation in July 1959 with an initial capital of N17million naira. The banks function as enshrined in section 54 of the CBN Act 1958. The objectives of the CBN have remained largely unchanged to include:
·  To issue legal tender currency note coins in Nigeria
·  To act as lender of last resort
·  To maintain Nigeria’s external reserves to safeguard the value of the naira in international markets.
·  To promote and maintain monetary stability and a sound and efficient financial system.
·  To act as a banker and financial adviser to the federal government of Nigeria.
Hence, to achieve the above objectives, the CBN as part of its statutory functions formulates and implements the monetary policy through direct and indirect control techniques. Direct techniques like interest rate ceilings, administrative determination of interest rate, restriction of banks credit expansion, mandatory holding of government securities, and sectoral allocation of credit were abandoned when it was obvious that monetary resources were misallocated as price did not reflect their true value. Indirect techniques, which the CBN has adopted since SAP in 1986, rely on underlying demand for supply of monetary assets, targeting the balance sheet of deposit money banks. Adopting indirect control techniques involved regulating credit banks using the minimum anchor for all money market interest rates, to alter variations in the demand for and supply of monetary assets in the direction that is consistent with price stability.
            Money market as the greatest CBN indirect monetary control instruments, comprising banks and non – banks institutions. These include:   
Commercial bank, merchant banks, development banks, discount houses, financial houses, primary mortgage institutions, insurance companies. They are operators in the money market in Nigeria, contributing to the allocation of monetary assets between economic units. Banks in a financial system performs intermediating rates by mobilizing role resources and channeling then to productive activities in the economy, thereby channeling productive resources from surplus sectors to the deficit sector, so, ensuring a more efficient resources allocation and utilization.
A measure of the performance of the banking sector lies in its ability to promote banking habit captured in the currency ratio (currency outside banks to broad money). Infact, as at May, June & July 2010, the currency ratio stood at 7.6%, 7.3% and &.4% respectively (CBN money and credit statistics, 2010). Banks major function however, is to mobilize saving to GDP ratio, at the prime of the market in 1960 the ratio was 1.96 percent, for 1970, it was 7.8 percent 1984, 11 percent in 1989.90 and grew to 13 percent as at 2007 (CBN statistical bulletine 2008).money market ensure the maintenance of equilibrium between the demand and supply of funds, hence it always equilibrate saving and investment in an economy. It ensures the application of economy in the use of cash.
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