The CBN Act mandates that the Central Bank manage monetary policy in a neutral and autonomous manner. There is a contentious debate about whether the Central Bank should be obligated to the government in light of the importance of monetary policy to long-term economic development. The Free Market (FM) argues in favor of a body that oversees monetary policy and is totally free of party political influence. According to the Governed Market model (GM), monetary policy should not take priority over the strategic economic policy choices made by elected authorities. The FM method was adopted by Nigeria and placed into the CBN Act. It gives the Board of Governors the power to determine monetary policy without interference from elected or appointed partisan government officials. It should be noted that the only prerequisite for the Naira’s design is the President’s mandatory approval under Section 19 of the CBN Act.
Law does not mandate that the CBN inform or seek approval from the Ministry of Finance. Yet, the President’s choice and approval should be discussed in the Federal Executive Council’s weekly meeting for the purpose of economic coherence. This is due to the fact that, despite the CBN’s involvement in the currency redesign, the choice to do so is a result of the Federal Government’s monetary policy and will have a substantial impact on the economy and society. The lack of communication across the whole government demonstrates the dysfunction of the Buhari administration.
In accordance with Section 20 of the CBN Act and in accordance with Section 18 of the same Act, the Bank is authorized to call in any of its funds upon payment of face value and with reasonable notice (d). The role of Banks to the transition is described in Section 19. Banks must only use legal tender while doing transactions. They serve as a conduit for trade and the bartering of goods for cash.
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