Mention and explain five functions performed by the Central Bank of Nigeria showing how they facilitate commercial activities.

Answer Details

The Central Bank of Nigeria (CBN) is the apex bank of the country. Five of its functions and how they facilitate commercial activities are:

1. Issuing of currency: The CBN is the sole authority that prints and issues the nation's notes and coins. By providing an adequate and reliable supply of currency, it gives traders a trusted medium of exchange, which makes buying and selling easier.
2. Banker to the government: The CBN keeps government accounts, receives government revenue and makes payments on its behalf. This ensures smooth handling of public funds and finances projects that support business.
3. Banker to commercial banks and lender of last resort: The CBN holds the reserves of commercial banks, settles balances between them and lends to them when they are in difficulty. This keeps the banking system stable, so that businesses can bank and obtain credit with confidence.
4. Control of credit and the money supply: Through tools such as the bank rate, open market operations and reserve requirements, the CBN regulates how much money and credit is available. This controls inflation and interest rates and creates a stable environment for trade and investment.
5. Management of foreign exchange and external reserves: The CBN keeps the country's foreign reserves and controls the buying and selling of foreign currency. This enables importers and exporters to obtain the foreign exchange they need and helps to maintain a stable exchange rate for international trade.