When Central bank MPC cannot vote due to shortage of members: Case of Nigeria..

Came across this news over the long weekend which was really surprising. It said Central Bank of Nigeria was unable to hold a MPC meeting as there were not enough members as per the quorum.

Here is the press release of the Central Bank. The MPC constitutes of 12 members!

  1. the Governor of the Bank who shall be the Chairman 
  2. the four Deputy Governors of the Bank 
  3. two members of the Board of Directors of the Bank 
  4. three members appointed by the President; and 
  5. two members appointed by the Governor

Apparently, 8 of 12 positions are vacant. But 12 is too much for a country lie Nigeria.

This economist article says it is not really such a bad thing. After all Friedman wanted central banks to be run by computers:

According to some economists, this is in fact just how monetary policy should be done. Milton Friedman, for example, thought the Fed should be replaced by a computer that would increase the money supply at a steady rate. Others have proposed more elaborate, but equally mechanical, rules. Allowing a few wise men and women to meddle with the money supply, governed by their own discretion, is more trouble than it is worth, these economists argue. The best central bankers strive, with all the benefit of their erudition and experience, to be as boring as machines anyway.

In Nigeria, sadly, central banking is far from boring. Although growth has returned and the stockmarket is booming, the country still suffers from stagflation: a weak recovery combined with stubbornly high price pressures. In such a predicament, warm-blooded policymakers sometimes rush to fight the “stag”—by cutting interest rates prematurely—before they have properly quelled the “flation”. A Friedmanite might therefore hope that Nigeria’s rate-setting committee remains inquorate for a little longer.

In the scanned note, the central bank welcomed recent improvements in financial conditions and promised to continue its “proactivity”. One difficult art a computer would struggle to replicate is that of irony.

🙂

 

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One Response to “When Central bank MPC cannot vote due to shortage of members: Case of Nigeria..”

  1. A Vasudevan Says:

    Your interesting piece on Nigeria not able to hold MPC meeting. Having been a part of the set up of the Central Bank of Nigeria for almost 5 years till the middle of 2012, I know that MPC functions much better than in many other African countries and perhaps Asian countries. The Governors during my years of association with CBN were very objective and they allowed even their Dy Governors to disagree with the main point of discussion, say to change the interest rate or not. Each MPC member is expected to give rationale for the arguments advanced. It is however possible members may change their initial positions after more information is provided by the Governor as Chairman of the Committee. The Committee meets for two days and the communique is prepared within 2 hours of the closure of the meeting on the second day and the Press is asked to come over to get the communique from the Governor or the Deputy Governor in charge of Monetary Policy. Press often asks for clarifications and questions the rationale of the final decisions.
    I must also add that every member gives in writing his/her submission to the Committee before the end of the second day, at least during my days. And after going through all the submissions, they are put out on the CBN website.
    My submission is not a comment on your piece but a bit of information which some of your readers may like to have with them.

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