Essay About Central Bank Regulation And Developing Countries

Central Bank Regulation
I have noticed that Central Bank regulations over time have followed an adaptation of best fit. What is regarded as standard in most Developed countries if adapted to the Developing countries may need extra adjustment to the regulatory framework.In as much as there need to be a well defined rule of engagement for the central banks, the regulatory framework should not be subjected to political interference and preference.How do we explain a depletion of Federal Reserves in Developing countries whose main source revenue happens to be Oil at the time of high Oil prices and at maximum production, also unnecessary high interest rate.There is a serious need to consider Political interferences that are peculiar in Developing countries of the world.Recently in Nigeria, the Apex Bank decided to implement the Banks and other Financial Institution Act (BOFIA)(“In accordance with BOFIA 2010 LFN, banks are required, subject to the written approval of the CBN, to publish not later than four months after the end of each financial year, their audited financial statements (statement of financial position and statement of comprehensive income) in a national newspaper printed and circulated in Nigeria. To facilitate the implementation of consolidated supervision, all banks, discount houses and their subsidiaries shall continue to adopt December 31, as their accounting year-end”).The purpose of this is to stop the unnecessary doctoring of Financial Statement by Bank Executive in order to look healthy. This is a good regulation by the Apex Bank and it helps to keep the banks under check. Now what happens to this kind of regulation if there are cross parties with Political affiliation to the governmet at the center, definitely there will be some lobbying. To gain the trust of local and international Financial companies, the Regulation of the Central Bank should not only be seen to be independent but must act independently and in line with good monetary policies.