Thesis Abstract

Abstract
This research project aims to evaluate the examination of the role of financial banks in consolidating stability in foreign exchange markets. The foreign exchange market plays a crucial role in the global economy by facilitating international trade and investment. Financial banks are key players in this market, providing liquidity, market-making services, and risk management tools that help maintain stability. However, the role of financial banks in ensuring stability in foreign exchange markets is complex and multifaceted. The study will employ a mixed-methods approach, combining quantitative analysis of market data with qualitative interviews and surveys of financial industry experts. By examining the activities and strategies of financial banks in the foreign exchange market, the research will assess their impact on market stability. Factors such as market liquidity, volatility, and regulatory frameworks will be analyzed to understand how financial banks contribute to stability or pose risks to the market. The research will also investigate the role of central banks and regulatory authorities in overseeing financial banks' activities in the foreign exchange market. By exploring the regulatory environment and policy tools available to mitigate risks, the study will provide insights into how regulators can promote stability while allowing financial banks to fulfill their market functions effectively. The findings of this research project will contribute to the existing literature on financial markets and foreign exchange by providing a comprehensive evaluation of the role of financial banks in consolidating stability. The results will have implications for policymakers, regulators, financial institutions, and investors seeking to understand the dynamics of the foreign exchange market and enhance stability. Overall, this research project seeks to enhance our understanding of the complex interplay between financial banks, market dynamics, and regulatory frameworks in maintaining stability in foreign exchange markets. By shedding light on the role of financial banks in this context, the study aims to provide valuable insights for stakeholders looking to promote a more stable and resilient global financial system.

Thesis Overview

INTRODUCTION

1.0 BACKGROUND TO THE STUDY

The goal of every government of nay economy is to archive equilibrium in the economic system. It is therefore important that the authorities concerned must regulate the system indirectly with policies. This necessitates that government of any country adopting certain economic policies in order to consolidate specific macro-economic goal or objective. Some of such major economic policies include the monetary policies, fiscal policies, exchange rate policies, most of this policies can only be administered thorough the agent of commercial bank which is the pivot of this research work. In Nigeria for instance. Monetary policies have been conducted under wiled ranging economic environment since the establishment central bank of Nigeria (CBN) over many years ago. Basically, monetary and finical polices serve as one of the vital and strategic economic policy adopted by the government of the country in posturing the economic development with a view of consolidating certain economic goals such as acceleration of the economic growth, sustainable balance of payment, maintaining a stable exchange rate of international competitive level, combating inflation, price stability and full employment.

Monetary policy is defined according to the CBN briefs 1994 as the combination of measures design to regulate the values supplied and cost of money in an economy. In consonance with the level of economic activity. Anyanwu (1993, VS 140) refer monetary policies as major stabilization weapon involves measure designed to regulate and control the volume, cost, and availability and direction of money and credit in an economy to archive some specified macro-economic policy objectives. Fiscal policy on the other hand is an attempt by the government using expenditure and tax policy to shift the aggregate demand and aggregate expenditure functions towards desired position. According to Anyanwu (1997, VS 241) fiscal policy is taking to refer to that part of government policy is concerning the raising of revenue and deciding on the level and pattern of expenditure fore the purchase of influencing economic activities or attaining some desirable macro-economic goods. The intricacy in handling the monetary and fiscal policy to consolidating the desired macro-economic objective necessitate that needs for an independent authority so in Nigeria today.

The federal government is the sole monetary authority, but it has delegated some aspect of implementation to both the ministry of finance and the central bank of Nigeria is to formulate and execute monetary policy, to promote financial system. To archive a desired policy objective, the CBN is empowered to use monetary policy techniques or instrument and the CBN dose most of its function through he commercial banks. This techniques can be classified into group, the direct portfolio control and the indirect portfolio approaches. Indirect portfolio includes the open market operation (OMO), reserve requirements, discount rate mechanism. While direct instrument includes; selective credit control, credit selling and moral suasion. Furthermore monetary policy presupposed that there is some relationship between the supply and the demand for money on the one hand economic aggregate such as output, income, savings, general price level and investment.

The mix of monetary policy instrument to be used and its effectiveness depends on this relationship. Monetary policy involves monetary management. Monetary management according Ojo (1992, VS 3) is defined as the act of controlling the movement of monetary and credit aggregate in the issuancxce of stable price and sustainable economic growth. Therefore the Central bank or the central monetary authorities must attempt to keep the money supply growing at an appropriate rate o insure sustainable economic growth, domestic and external stability. Howe ever, in Nigeria the role of monetary and fiscal policy has increased tremendously since after independence. Both civilians and minitry government has adopted this policies consolidate macro objectives. But despite this measure to suit the constant changes in the economic situation of Nigeria, still a lot of problem be deviled the economy ranging from high unemployment, inflation and balance of payment. This prompted me to research on examination of the roles of commercial banks in consolidating stability in foreign exchanges.

1.1 STATEMENT OF PROBLEMS

The application on the monetary and fiscal policies by the monetary authorities using the monetary instrument such as open market operation (OMO), bank reserves etc. in consonance with the prevailing economic situation is aimed at consolidating the macro-economic good of the country such as full employment, low level of inflation, favorable balance of payment. But in Nigeria, inspite of this numerous monetary policy measures adopted, the economy still suffers the problem of high rate of unemployment, inflationary pressure, balance of payment deficit and unstable foreign exchange.

The question that follows the effective are monetary and fiscal policies are in controlling some of this variables, inflation in particular. Why have monetary policies and fiscal policies late in ore economy inspite that they have work in other country. What may be the reason militating against the effectiveness of the monetary policies? As the commercial are the enzymes used by the CBN in administering economic measures, what can they do to aid in consolidating foreign exchange stability. In view of the above outlined question, this research work will try as much as possible to proffer some answers.

1.2  OBJECTIVE OF THE STUDY

The study aims on finding the following;

1. To reexamine the instrument of monetary and fiscal policy and there performance

2. To examine the major policy objective and their achievement in the country

3. To appraise some monetary and fiscal policy measures in Nigeria and see how commercial bank respond to there instruction

4. To make recommendation to policy members