Before the establishment of the Central Bank of Nigeria the West African Currency Board (WACB) which was established in 1912 had the responsibility for issuing legal tender currency. The WACB was set up to promote the financing of the export trade. It was the duty of WACB to issue West African currency. The exchange of existing currencies and the investment of reserves.

The reserve were invested in Britain and this is in a way facilitated Nigeria’s international payments. However because the WACB was linked to the British system it could not engage in monetary management neither Nigerian trained in the art of monetary management.

In order to promote the growth of the domestic money and capital markets. There by eliminating this deficiency. The Central Bank of Nigeria was established in 1958 and it commenced business on 1st July 1959.

The central bank of Nigeria formulates monetary proposal in a memorandum which is sent to the government through the minister of finance. Taking into consideration the views and suggestions of the banking community and other business interest and interested public groups and other business interest and interested public groups and individuals.

Monetary policy in Nigeria is conducted by the Central Bank of Nigeria set up under the Central Bank of Nigeria (CBN) ordinance of 1958 (as amended from time to time) to serve as banker and foreign exchanged dealer principally to the federal government of Nigeria.