What You Think the CBN Does vs. What It Actually Does: A Deeper Look

The Central Bank of Nigeria (CBN)—you know, the big boss of money matters in the country. People talk about it like it’s the omnipotent fixer of all things economy, but how well do we really understand what the CBN does? Spoiler alert: It’s not out here printing money like a drunk uncle at a wedding. Let’s tackle the common misconceptions about the CBN and, more importantly, what it actually does.

Misconceptions of the Apex Bank

The CBN Controls the Naira’s Value Like a DJ Spinning Tracks

A lot of people believe the CBN can magically stabilize the naira with a flick of its wrist. Exchange rate goes up? “Ah, CBN has failed us!” Exchange rate comes down? “Finally, they’re doing something!”

But here’s the tea: the naira’s value is influenced by a complex mix of global currency markets, local production, and international trade. Sure, the CBN has tools to manage currency supply, but it’s not the Naija-dollar DJ you think it is.

The CBN Hands Out Loans Like Your Favourite Cooperative

Some folks think the CBN is Nigeria’s financial Santa Claus—just doling out loans to anyone who asks. Need to start a cassava empire? Call the CBN! Want to buy that dream car? CBN has your back! Sorry to burst your bubble, but that’s not how it works. The CBN’s job is to regulate banks and keep the financial system stable—not run a country-wide lending bonanza.

The CBN is Just a Bank for Banks

This one’s partially true, but there’s more to the story. Yes, the CBN oversees commercial banks, like a strict but fair headmaster. But beyond regulating and supervising banks, the CBN also ensures economic stability, tackles inflation, and implements monetary policy. In short, it’s not just the 'Bank Boss'—it’s the economy’s behind-the-scenes MVP.

The CBN Prints Money Anytime It Feels Like It

Here’s a popular one: “Why don’t they just print more money so everyone can have some?” Well, here’s why—that would tank the economy faster than a dodgy Ponzi scheme. Printing money indiscriminately causes inflation. The CBN operates within strict monetary frameworks to avoid exactly that scenario.

What the CBN Actually Does

Manages Monetary Policy to Keep the Economy in Check

The CBN’s top job is ensuring Nigeria’s economy doesn’t go off the rails. This involves adjusting interest rates, controlling money supply, and keeping inflation in check. So, if you’re wondering why your rent hasn’t doubled in six months, that’s the CBN trying to hold things down.

Regulates the Financial System (Sorry, No Free Loans Here)

The CBN makes sure your bank doesn’t collapse while you’re saving for that detty December trip. It regulates banks, intervenes when necessary, and ensures the financial system runs smoothly. However, it doesn’t hand out loans to individuals or businesses—its focus is on keeping the entire system stable.

Supports Broader Economic Policies

The CBN isn’t Nigeria’s sole economic saviour, and it’s not trying to be. It works hand-in-hand with government policies, private sector innovation, and global economic trends. Think of the CBN as part of the team, not the entire squad.

Plays the Long Game with Interest Rates

Adjusting interest rates isn’t the most glamorous thing, but it’s one of the CBN’s most important tools. For instance, in November 2024, the CBN raised the Monetary Policy Rate to 27.50% to tackle inflation and stabilize the naira. These moves are calculated to address bigger economic challenges—not made on whims.

Why This Matters to You

Understanding the CBN’s role helps set realistic expectations. It’s not a magical fix-it-all institution, but it’s crucial to Nigeria’s financial health. The next time someone blames the CBN for everything from the exchange rate to the price of pepper, you’ll know better.

So, what does the CBN really do? It manages monetary policy, ensures the banking sector runs smoothly, and works to stabilize the economy—not print endless money or give out free loans. It’s not flashy, but it’s fundamental. And for Nigeria’s economy, that’s what matters most.

Stay informed. Keep asking questions. And remember: the naira might be in their hands, but the future is in all of ours.