in the event of temporary deficiency of budget revenue, which should not exceed 12. 5 per cent of its estimated recurrent budget revenue. such advances should be repaid fully by the end of the government ’ s financial year. moreover, the total amount of government securities of more than two years tenor held by the cbn should not exceed 75 per cent of the total demand liabilitiies of the bank. cognizant of the importance of central bank autonomy for and the significance of fiscal prudence to the effective conduct of monetary policy, the cbn was actively involved in the fiscal responsibility bill, currently under consideration by the national assembly of the federal republic of nigeria. the law, if passed, would establish further limits on government borrowing from the cbn. under the current dispensation, the effectiveness of monetary policy is often constrained by fiscal surprises. in particular, monetary financing of large fiscal deficits, which averaged 7. 5 and 5. 6 per cent of gdp annually in the 1980s and 1990s, respectively, resulted in the over - burdening of monetary policy and its effectiveness. this has of course been moderated by the current democratic government and reduced to annual average of 4. 0 per cent in 2001 and 2002. in keeping with the principle of transparency and accountability in the conduct of monetary and financial policies, the cbn publishes its monetary policy objectives, targets and measures for a two - year period. the exercise involves the review of developments in the economy during the preceding year, the identification of the prospects and problems in the years ahead and the outlining of the policy goals and performance targets for the period. the monetary policy committee ( mpc ) meets every fortnight to appraise the performance of the economy and conditions in the money and foreign exchange markets with a view to reviewing the current policy measures, either in terms of adopting new policy initiatives or fine - tuning the existing ones as the need arises. the committee is made up of the governor as chairman, four deputy governors and heads of relevant departments as members. others are two members of the board of governors, including the permanent secretary, federal ministry of finance. in the spirit of transparency, the summary discussions and decisions of the mpc are communicated to the general public in newspaper publications every month. similarly, another committee, the financial sector surveillance committee ( fssc ) also meets every fortnight to review developments in the financial sector with a view to taking appropriate regulatory / supervisory action that will ensure the stability and soundness of the system.

sanusi lamido sanusi : banks in nigeria and national economic development – a critical review keynote address by mr sanusi lamido sanusi, governor of the central bank of nigeria, at the seminar on “ becoming an economic driver while applying banking regulations ”, organised by the canadian high commission in joint collaboration with the chartered institute of bankers of nigeria ( cibn ) and the royal bank of canada ( rbc ), lagos, 7 march 2011. * * * protocol 1. i am very delighted to be invited to present a key - note address at this important forum. i wish to commend the organizers, the canadian high commission, the chartered institute of bankers of nigeria and the royal bank of canada for gathering top policy makers and operators in the banking and finance industry here today for this all important seminar which is focusing on the banking sector in nigeria. the theme of this seminar “ transformational banking for economic development ” is indeed topical, and couldn ’ t have come at a better time, considering that the banking sector in nigeria is passing through a critical and decisive path in reforms to reposition it to effectively impact on other sectors of the economy, especially the real sector. 2. economic development is about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments which otherwise could lower costs and hinder investment. the banking system plays the important role of promoting economic growth and development through the process of financial intermediation. many economists have acknowledged that the financial system, with banks as its major component, provide linkages for the different sectors of the economy and encourage high level of specialization, expertise, economies of scale and a conducive environment for the implementation of various economic policies of government intended to achieve non - inflationary growth, exchange rate stability, balance of payments equilibrium and high levels of employment. 3. the role of finance in economic development is widely acknowledged in the literature. in particular, schumpeter ( 1911 ) put the role of financial intermediation at the center of economic development. he argued that financial intermediation through the banking system played a pivotal role in economic development by affecting the allocation of savings, thereby improving productivity, technical change and the rate of economic growth. he believed that efficient allocation of savings through identification and funding of entrepreneurs with the best chances of successfully implementing innovative products and production processes are tools to achieve this objective. 4. the endogenous growth literature also supports the argument that financial