Every Nigerian at some point in time has questioned why the Central bank of Nigerian (CBN) can’t print more money to subsidize the financial difficulty in the country. Others have the knowledge that the Nigerian government can’t print more money but not the why. Let me explain the reason why the central bank of Nigerian can’t print more money to make Nigeria rich while explaining which country can.
Brief explaining of the Central Bank of Nigeria
Central Bank of Nigeria has a Currency Operations Department within the CBN that is responsible for the printing of money. And also, The Nigeria Security Printing and Minting (NSPM) Plc print/mint the Naira notes while CBN Mint Inspectorate office within the NSPM Plc carries out quality control and receipt of finished Naira banknote. There are some factors to consider before printing more currencies in Nigeria such as inflation rate, buffer stock, and Gross Domestic Product (GDP).
High Inflation rate
Printing of more money lies with the federal government, if the government prints more money in order to become rich while avoiding borrowing/debts or paying off debts, there would be too much money chasing few goods which will worsen inflation. Also, it is better to have national debt than printing more money because money borrowed can be offset through taxes at the end of the period and the burden falls evenly on the economy rather than devaluing (inflation) the money on the global level.
The federal government of Nigeria influences the supply of money in circulation to avoid high inflation growth. Nigeria cannot be rich by printing more money because there are no economic activities to match the amount of money to be printed.
In addition, there is no restriction on the amount of money Nigeria can print through Nigeria Security Printing and Minting (NSPM) Plc, if every citizen has more money at their disposal that means there will be a continuous rise in prices of goods. At the moment (2020), Nigeria inflation is around 12% compared to a preferred band of 6-9% and susceptibility of domestic price levels to exchange rate, there would be a sharp rise in inflation if more money is printed, the existing inflation problem (no economic activities) will escalate resulting to hyperinflation.
This is the answer to most of your assumptions. Thank you for reading kindly follow and comment what you think
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