RETHINKING THE CBN’S MANDATE – THISDAYLIVE

  Malaysia holds lessons for Nigeria, writes

UCHE UWALEKE

During a recent academic study tour of key financial institutions in Malaysia with some of my Ph.D students from Nasarawa State University, Keffi, I had the opportunity to visit Bank Negara Malaysia (BNM), the Central Bank of Malaysia, where senior officials made presentations on the Bank’s mandate and institutional framework. What particularly caught my attention was the positioning of sustainable economic growth as the ultimate objective, with monetary stability serving as an important means towards achieving that broader objective. I was equally struck by the emphasis placed on enhancing the financial well-being of households and businesses as one of the Bank’s strategic thrusts.

These aspects of the Malaysian framework prompted me to reflect on what Nigeria might learn from a central banking model that appears to place monetary stability within a broader developmental conception of economic policy. The Malaysian experience therefore offers Nigeria an opportunity to revisit a fundamental question about the role of a central bank in a developing economy: should monetary stability be regarded essentially as an end in itself, or as one of the instruments through which the broader objective of sustainable economic growth and improved economic welfare can be achieved? The question is not whether monetary stability matters; it unquestionably does, because stable prices are indispensable to investment, savings, production and household welfare.

The more important question is whether a developing economy such as Nigeria should expect its central bank to remain largely focused on monetary stability while leaving the pursuit of sustainable economic growth almost entirely to the fiscal authority. It has been argued that the real issue for…