Assessing the Issues in Central Banking Independence: The Nigerian central Bank in the Light of the Proposed Amendment Bill by Nigeria Senate of CBN Act

The aim of this paper is to assess the issues in central banking independence in the Nigerian central bank in the light of the proposed amendment bill by Nigeria senate of CBN ACT. The CBN independence began with the promulgation of the CBN Decree (now Act) No. 24 of 1991. The enactment of the Banks and other Financial Institutions Act (BOFIA) 1991 was considered a landmark accomplishment in the Bank’s history as it conferred on the CBN some degree of instrument autonomy for the effective discharge of its core mandate. However, the law and its subsequent amendments could not keep pace with the challenges that emerged because of the rapid reforms in the financial sector of the 2000s. These necessitated a comprehensive review of the existing legal framework to strengthen monetary policy formulation and implementation, while ensuring its effective transmission as well as the enhancement of the supervisory capacity of the Bank. Following the CBN amended Decree No 3 and BOFIA (amended Decree No 4) of 1997, the CBN was directly under the responsibility of the Ministry of Finance, with respect to supervision and control of banks and other financial institutions. The amendment placed enormous power on the Ministry of Finance, while leaving the CBN with a subjugated role in monitoring financial institutions with little room for the Bank to exercise discretionary power. However, the CBN regained operational autonomy in 1998, because of the CBN amendment Decree No 37 of 1998 that repealed the 1997 Decree. In 2007, the Bank proposed several measures to strengthen both the CBN and BOFI Acts. Eventually, only the Bill embodying the CBN Act was passed into law by the National Assembly (NASS) and assented to by the President.