Court Rules IRS Can Seek Information on Bitcoin Customers – WSJ

Agency to serve Coinbase with summons as part of wide-ranging tax probe

A federal court on Wednesday ruled that the Internal Revenue Service can serve digital-currency-services company Coinbase with a “John Doe summons” that seeks detailed information on its customers’ transactions from 2013 to 2015.

The IRS and the Justice Department are looking for information about the use of the digital currency bitcoin and the possibility that it has been used to evade federal tax laws over the three-year period. The agencies don’t have any proof of tax evasion, and there is no allegation that Coinbase engaged in any wrongdoing.

“We are aware of, and expected, the Court’s ex parte order today,” Coinbase said in a statement. “We look forward to opposing the DOJ’s request in court after Coinbase is served with a subpoena. As we previously stated, we remain concerned with our U.S. customers’ legitimate privacy rights in the face of the government’s sweeping request.”

Coinbase, founded in 2012 and based in San Francisco, offers “wallet” services for its customers, essentially online accounts for holding and trading bitcoin. The company has raised $117 million in capital in its history. 

Coinbase said it currently maintains about 5 million wallets for its customers and had about 3 million at the end of 2015, the period under question by the IRS. The accounts are spread out globally, however, and aren’t just in the U.S.

Bitcoin was launched in January 2009 by a person or group under the pseudonym ofSatoshi Nakamoto. The digital currency is maintained by a distributed network of computers and isn’t backed by any government or central agency. Transactions on the bitcoin network are visible on a public ledger, but the identity of the participants is encrypted.

In 2014, the IRS declared it would treat bitcoin as property for tax purposes, subjecting it to the same regulations as other securities, meaning holders would face capital-gains taxes if they sold bitcoin at a profit. However, given the hidden identity of its holders, the IRS suspects those taxes aren’t being paid by some bitcoin users in the U.S.

“The John Doe summons is a step designed to help the IRS ensure people doing business in the emerging economy are following the tax laws and meeting their responsibilities,” said IRS Commissioner John Koskinen in a press release from the Justice Department.

According to a Wall Street Journal article in 2015, the John Doe summons allows the IRS to obtain information about all taxpayers in a certain group, even if the agency doesn’t know their identities. 

The price of bitcoin didn’t move on Wednesday’s news. It was recently trading around $742, up about 1% on the day.

Two other prominent startups that offer digital-currency services, and Circle, said they haven’t heard from the IRS, but their business models are somewhat different from Coinbase’s, which may explain why they haven’t been contacted.

Write to Paul Vigna at

Yuan Advances to Four-Month High Against Trade-Weighted Basket – Bloomberg

  • PBOC now working to slow depreciation against dollar: ANZ
  • Stabilizing economy also seen supporting China’s currency

China’s yuan climbed to a four-month high against a trade-weighted index amid speculation the central bank wants to prevent excessive depreciation versus the dollar.

A Bloomberg replica of the CFETS RMB Index, which measures the yuan against 13 exchange rates, gained 0.3 percent on Wednesday to 94.95, the highest level since Aug. 1. The yuan was Asia’s second best-performing currency in November, excluding the Hong Kong dollar which is pegged to the greenback. The People’s Bank of China weakened the daily reference rate by 0.14 percent to 6.8958 per dollar on Thursday, about 100 pips stronger than Australia & New Zealand Banking Group Ltd.’s prediction of 6.9060.

Such a wide gap between the official fixing and the forecasts of analysts has often occurred when the Bloomberg Dollar Spot Index gains more than 0.5 percent overnight, spurring speculation the central bank wants to slow depreciation versus the greenback. The yuan also found support from data showing the economy is stabilizing. The official manufacturing purchasing managers’ index rose to 51.7 in November, higher than the median estimate of economists.“The increase in the CFETS index reflects the ‘capping effect,’ as the PBOC tries to control the pace of yuan depreciation against the dollar, leading to a relatively better performance versus other currencies,” said Irene Cheung, foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. “On the other hand, the stabilizing Chinese economy is also lending support to the currency.”

PBOC Deputy Governor Yi Gang said on Nov. 27 the Chinese currency’s depreciation versus the dollar was largely driven by the strength of the greenback and the market should refer to its performance against a basket of currencies as the economy maintains stable growth. The country’s authorities have also stepped up efforts to curb outflows after the yuan declined to its weakest level versus the dollar in eight years.

“Unswerving yuan bears” are just being stubborn, as the economy isn’t so bad, Guan Tao, a former official with the State Administration of Foreign Exchange, wrote on Thursday in a front-page commentary in the Financial News, a publication managed by the PBOC.

“There are signs that the Chinese authorities are shifting the focus to the yuan index, given the dollar’s strength recently,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. “The CFETS index will become the market focus as the new anchor.”

The onshore yuan fell 0.13 percent to 6.8940 per dollar at 4:39 p.m., after touching an eight-year low of 6.9270 on Nov. 24. The currency traded in Hong Kong’s offshore market rose 0.17 percent to 6.9046.

— With assistance by Helen Sun

How Arik Air, Air France, Others Got $867m in October – Thisday

By Obinna Chima

The Central Bank of Nigeria (CBN) wednesday published the list of firms that were able to access forex totaling 867,834,186.26, from the interbank market in October.

The return on FX Utilisation published on the CBN website yesterday showed that it met about 7,792 requests for FX.
Some of the companies that benefitted included Arik Air, Air France , Elephant Group, Flour Mills, HarvestField Industries Limited, Consolidated Hallmark Insurance, Mouka Limited, Parceo Enterprises Limited, Chi Limited, Steel Blue Limited and Nigeria Pipes Limited.

Other firms that were able to purchase FX in the month under review included De United Foods Limited, Tata Africa Limited, Crownstar Limited, Vitafoam Limited, Seven Up Bottling Company, Glaxosmithkline Export Limited, Unilever Nigeria Plc, Ok Foods Limited, World Wide Commercial Ventures Limited, Nestle Nigeria Plc, Promasidor, Indorama Petrochemical Nigeria Limited, British American Tobacco, and several others.

The month also recorded FX purchases for capital repatriation by Stanbic Nominees-Bank of New York, Stanbic Nominees-JP Morgan, Stanbic Nominees -BNL Paribas and Stanbic Nominees-Northern Trust.
A summary of the FX Utilisation for the month of October 2016 indicated that the raw materials sector received the highest allotment, as it got access to FX valued at $355,744,861.05 or 40.99 per cent of the total value of FX utilisation for the month under review. The manufacturing and petroleum industries got access to $91,276,699.30 and $150,815,804.73, respectively. Companies and other interests in the agricultural sector got access to $13,714,552.83 for the period, while entities in the aviation sector received $10,313,648.29 for the same period. Finished goods and others got allotments of $43,838,044.04 and $10,795,488.92, respectively. In addition, invisibles, comprising of school fees, students’ upkeep and medicals, among others, received $191,335,087.10 or 22.05 per cent of the figure.

The Director, Corporate Communications Department, CBN, Isaac Okorafor, said the release of the figures underscored the transparency of the bank in foreign exchange management.


Embrace professionalism in forex market – ABCON – The Nation

The Association of Bureaux De Change Operators of Nigeria (ABCON) says it is committed to deepening professionalism among its members to gain investors’ confidence.

Alhaji Aminu Gwadabe, ABCON’s President, said this at the South-West zonal meeting of the association on Thursday in Lagos.

He said that the body believed that professionalism engendered foreign investors’ confidence in the Nigerian foreign exchange market.

Gwadabe called on Bureaux De Change (BDCs) operators to distinguish themselves from parallel market operators by rendering efficient services and complying with regulations.

He said that while the pressure on the naira was due to liquidity problems and confidence, professionalism on the part of BDCs would help boost foreign investors’ confidence in the nation’s foreign exchange market.

“ABCON is committed to boosting foreign investors’ confidence as this will help attract the much-needed liquidity into the market and reduce pressure on the naira exchange rate.

“You have to distinguish yourselves from parallel market.

“We are the ones licensed to operate the business, but we must prove this by distinguishing ourselves through the way we serve our customers.

“Before now, there were criticisms about BDCs but now we are the new bride of the regulators,’’ Gwadabe said.

The president also urged members of the association to comply with the necessary requirements in their businesses, to ensure that they sustain the renewed regulatory interest and confidence in BDCs.

“The Central Bank of Nigeria is willing to expand our scope of business, but this is conditioned on our willingness to increase our level of professionalism.’’

Gwadabe advised BDCs not to limit their services to foreign exchange needs for Personal Travel Allowance (PTA).

“Why is everybody just doing PTA, when you can do mortgage, school fees and medical expenses?

“You can do mortgage, medical and school fees on a cash basis, provided you don’t exceed $5,000, and you ensure all the necessary documentations are provided.’’

Gwadabe assured members that the association had started addressing the challenges experienced by BDCs in verifying Biometric Verification Numbers (BVNs) and the international passports of prospective customers.

He added that ABCON had started discussions with the management of Nigeria Interbank Settlement System (NIBSS), on the need to provide the dedicated channel for BDCs to verify BVNs and international passports.

He, however, advised BDCs to be patient and continue to use the available channel to verify BVNs and the international passports of customers.

He also advised BDCs to deal with people they were familiar with to ensure compliance with the Know Your Customer (KYC) requirement of the Central Bank of Nigeria (CBN).

Gwadabe also said that the association had set up a surveillance committee to monitor the activities in the BDC sector.

He called on members of the association to help facilitate the work of the committee by providing it with information on any observed malpractice, by any operator.

What you need to know about Bitcoin – Punch

Nowadays, Bitcoin is being discussed aloud in the cyber space. So, for your knowledge, let me tell you that Bitcoin is just a virtual currency and not in the physical existence. Various websites accept this currency for online shopping. A Japanese computer programmer invented the currency in 2009.

Bitcoin is the series of characters and numbers, which can be placed safely inside a virtual wallet. No central bank issues this currency and no government agency manages the Bitcoin.

How Bitcoin is created

New Bitcoins are created using an open source software and this process of creating new virtual currencies is known as mining. Everyone can perform mining to create Bitcoins. But, to create Bitcoins, it is necessary to have high speed Internet and high performance computer power.

Recently, the world’s first Bitcoin ATM came into being in Canada. Using this ATM, any official currency can be converted into Bitcoin.

According to a survey, more than 1.1 Crore (approximately 55000 Crore Indian Rupees) Bitcoins are available in the world. In case of India, approximately 21 million Bitcoins are hidden across the Internet. These Bitcoins can be bloomed around 2040.

Bitcoin is pure, unregulated, and open

Pure may sound like a nebulous idea, but it isn’t. In regards to Bitcoin, it means that the price is regulated by pure supply and demand. Without any demand, the price will drop. This also relates to commodities in that sense. Ever since governments stepped in, it seems that it’s doing worse and worse.

This also means that Bitocin’sopenness allows people to create their own unregulated ways to utilise it. Whether it be peer to peer lending, to stock markets of Bitcoin service companies, Bitcoin creates an economy of its own, by the people, for the people.

According to, Bitcoin will never die as long as individuals run the Bitcoin software. Typically, an Internet wallet has servers that run the software, but that’s a bit more complicated to describe. If someone wants to become a Bitcoin node, they run the software and start to process transactions.

Bitcoin embodies the Internet culture

It is open, free, “unbreakable” and decentralised. The Internet was started to share information, and Bitcoin is a revolution in that idea. Bitcoin is an idea, firstly, that financial property can be directly controlled by its owner. As we mentioned, banks own the money under deposits, they’re free to do whatever with a percentage of all deposits. When someone owns a Bitcoin, it operates similar to cash in the fact that the one in possession of the private key has the ability to do with it what they please. Bitcoin is a decentralised cryptocurrency, meaning that it cannot (easily) be shutdown.

Sterling sticks above $1.25 ahead of PMI data – Reuters

* Graphic: sterling and gilt yields

* Graphic: World FX rates in 2016

Dec 1 Sterling held firm above $1.25 on Thursday, having recorded its best month of gains against the dollar since March and its best month against the euro since 2009.

Analysts said a survey of Britain’s factory output due at 0930 GMT was unlikely to impact the pound significantly, with some questioning whether a broad rally in the dollar has any further to run until detail of president-elect Donald Trump’s pro-growth policies are unveiled.

Economists polled by Reuters expect Markit’s Purchasing Managers’ Index (PMI) of manufacturing companies to hit 54.5 in November, a shade higher than last month’s 54.3.

Another factor supporting the pound has been signs that investors are reducing short positions on the currency that surged after Britain’s vote to leave the European Union in June.

Sterling net shorts fell for a second straight week to 74,318 contracts, data showed on Monday.

“The most likely outcome is that volatility continues to fall and the pound drifts in a range against the dollar, with EUR/GBP reflecting the European political mood, which in turn gives GBP/USD a bearish bias overall,” Societe Generale strategist Kit Juckes said. 

The pound gained 0.2 percent against the dollar to trade at $1.2535, and was a touch up against the yen and the euro. (Reporting by John Geddie; Editing by Andrew Heavens)

Oil soars above $51 as OPEC agrees deal – Punch


By ‘Femi Asu

obal oil benchmark, Brent crude, traded above $51 per barrel on Wednesday after the Organisation of Petroleum Exporting Countries agreed on its first limit on oil output since 2008. 

OPEC had in September said it would reduce production to 32.5 million barrels per day from the current figure of 33.24 million bpd.

Brent, against which half of the world’s oil is priced, had dropped to as low as $46.32 on Tuesday, but jumped to $49.66 per barrel on Wednesday on growing optimism OPEC would agree on a production cut deal later in the day.

Following the outcome of the meeting, Brent rose by $4.18 to $51.50 per barrel as of 6:45pm Nigerian time.

At its 171st meeting in Vienna, Austria on Wednesday, the OPEC Conference studied the report and recommendations made by the high-level committee that was set up following the ‘Algiers Accord’ that was agreed at the 170th (extraordinary) meeting of the OPEC Conference on September 28 in Algeria, among others.

The 14-member oil cartel said in a statement that the conference took note of oil market developments since it last met in Algeria and reviewed the market outlook for the remainder of 2016 and 2017.

It said, “The conference recorded its deep appreciation to the commitment and valued contribution of the high-level committee on the implementation of the ‘Algiers Accord’.  The committee’s efforts helped form a consensus among member countries on the basis of a proposal put forward by Algeria to implement a new range of targeted production levels.

“Accordingly, and in line with the ‘Algiers Accord’, the conference decided to implement a new OPEC-14 production target of 32.5mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward. The agreement will be effective from January 1, 2017.”

The Conference also decided to establish a high-level monitoring committee, consisting of oil ministers, and assisted by the OPEC Secretariat, to monitor the implementation of the agreement. Member countries, in agreeing to this decision, confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had last week said oil price might rise only slightly above $50 per barrel if a consensus was reached, and could fall as low as $44 without a deal.


Naira Falls to N480/$ on Parallel Market on FX Scarcity – Thisday


By Obinna Chima in Lagos and James Emejo in Abuja

The naira depreciated to N480 to the dollar on the foreign exchange (FX) parallel market wednesday, from the N475 to the dollar it was the previous day.

The renewed slide of the nation’s currency on the unofficial arm of the market was attributed to the scarcity of the greenback, owing to the raid and arrest of operators in the segment of the market by security operatives.

But on the Bureau De Change (BDC) segment, the naira went for N400 to the dollar yesterday, while on the interbank FX market, the spot rate of the naira remained unchanged at N305 to the dollar wednesday.

Meanwhile, the Central Bank of Nigeria (CBN) and the Hong Kong authorities have issued warning to the general public on the circulation of fake hundred banknotes of Hong Kong Dollar (HK$100) in the country.

The counterfeit notes are reportedly printed on normal A4 paper using inkjet printers resulting in poor quality, lacking embossment and the feel of security features.

Furthermore, the silver marks were stuck on the notes to appear like the holographic security thread on the real bills.

A circular to the general public and operators posted by on the CBN website and signed by CBN acting Director, Trade and Exchange Department, W. D. Gotring added that the HK$100 numerals failed to turn gold and green when viewed from different angles.

The circular however, provided the public with useful qualities of a genuine Hong Kong Dollar banknote including the holographic windowed thread showing a complete metallic thread when viewed under light and the fact that when rubbed on the surface, the bill gives an embossed feeling.

Also, the colour and features of the banknotes shift when viewed at different angles.

“In light of the above, members of the public are enjoined to report any suspected fake Hong Kong Dollar to relevant security agencies for necessary action,” the CBN added.


Oil hits six-week high after OPEC deal, bond yields rise – Reuters


By Jamie McGeever | LONDON

Oil swept to a six-week high on Thursday, lifting energy shares in its slipstream, after OPEC agreed to cut crude output to clear a glut, while bond yields rose on prospects that resulting inflationary pressures will lead to higher interest rates.

European stocks slipped into the red, however, shrugging off the bounce in Asian shares and following Wall Street’s slight decline the previous day instead.

The Organization of the Petroleum Exporting Countries on Wednesday agreed to its first output cut since 2008, finally taking action after global oil prices fell by more than half in the last two years.

Non-OPEC Russia will also join output reductions for the first time in 15 years.

U.S. crude oil CLc1 added to overnight gains of 9 percent to reach $50.00 a barrel for the first time since October. Brent crude LCOc1, which soared $4 overnight, touched a six-week peak of $52.73 a barrel.

The jump in oil prices added to inflation expectations in the United States, which were already rising on prospects that president-elect Donald Trump would adopt reflationary policies using a large fiscal stimulus.

As a result the rout in U.S. Treasuries resumed, with yields pushing higher, especially on longer-dated bonds. The yield on 10-year and 30-year bonds <US10YT=RR< US30YT=RR, which are most sensitive to inflation eroding their value, rose 3 basis points to 2.40 percent and 3.06 percent, respectively.

“Higher oil prices, talk of ultra-long issuance in the U.S. and strong U.S. data all helped push U.S. yields higher,” RBC Capital markets said in a note to clients on Thursday.

“This remains our key theme for next year as well – we believe U.S. yields will keep leading the charge higher on improving macro backdrop and rising inflation expectations.”


The 30-year yield has climbed more than 40 basis points since the Nov. 8 presidential election, heading back towards a 14-month peak of 3.09 percent marked last week.

The 10-year yield had its biggest monthly rise in November since 2009. Bonds across the world lost about $2 trillion in market value since the Nov. 8 U.S. election, according to Bank of America Merrill Lynch .MERGBMI data.

Energy and resources stocks in Europe shares outperformed the broader indices, which snapped a two-day winning run. The STOXX Europe 600 Oil and Gas index .SXEP was up 1.5 percent, while the basic resources index .SXPP was up 2.1 percent.

Europe’s index of leading 300 shares .FTEU3 was down 0.3 percent at 1,347 points, Germany’s DAX was down 0.3 percent .GDAXI and Britain’s FTSE 100 was down 0.2 percent .FTSE.

MSCI’s index of Asian shares ex-Japan .MIAPJ0000PUS rose 0.5 percent, lifted by stronger-than-expected Chinese manufacturing data, and Japan’s Nikkei 225 .N225 rose 1.1 percent after the yen fell to its lowest since February close to 115 per dollar JPY=.

On Wall Street, futures are pointing to a flat open on Thursday ESc1 following Wednesday’s 0.3 percent fall on the S&P 500 on Wednesday .SPX.

All eyes are now on whether the OPEC deal will hold together. If the bounce in oil prices gathers pace after the OPEC deal it was expected to have a broad implication on the global economy.

Brent is off the 12-year low of $27 per barrel marked in January but still less than half of where they were in 2014.

Economists expect a further recovery in crude to bode well for oil-exporting economies, while potentially easing deflationary pressures in developed economies locked in a battle against falling prices.

OPEC’s output cut is also seen as a boon for U.S. shale producers, rivals to the oil cartel. The S&P energy index .SPNY jumped nearly 5 percent on Wednesday.

“The question is whether this (production cut) is going to put a floor under the oil price from here. The answer to that could well depend on what happens with the global economy in the coming year,” said Simon Smith, chief economist at FXPro.

In currencies, the dollar advanced to a 9-1/2-month high of 114.83 yen before pulling back to 114.10 and the euro recovered from the previous day’s slide to trade back above $1.06 EUR= after shedding 0.6 percent the previous day.

The dollar index .DXY was a shade lower at 101.35.

Spot gold XAU= touched a 10-month low of $1,163.45. Bullion fell 8 percent in November, its worst month in three years.

(Reporting by Jamie McGeever; Editing by Toby Chopra)


Economy: Moving from collapse to recovery – The Nation


By: Eghosa Osagie

It is interesting that almost all stakeholders who have tried to discuss our current economic predicament believe that the Nigerian economy is in “recession”. But is this a correct characterization? If these stakeholders are in error, then, we can conclude that the nature of the problem is not generally understood, and if policy makers are in error in this regard, then policies designed to revive the economy will be ineffective, and may aggravate current problems.

What economic condition is Nigeria now experiencing? Let us quickly dismiss what it is not. First, it is not depression, where national output, incomes, employment levels and rate of inflation are all negative. Second, it is not deflation, where price levels and interest rates decline as well as aggregate expenditure in the domestic economy, as is now happening in Japan. Third, it is NOT recession which is characterized by negative growth in national income for two consecutive quarters (six months) without incidence of inflation. Fourth, the closest term to describe the current Nigerian situation is stagflation, which is decline in national income combined with inflation. We can argue that while stagflation is the closest description of the present state of the economy, that state is actually worse than stagflation, in the sense that inflation is accompanied by absolute reduction in national income and employment level, as well as a chronic external deficit. If we accept the fact that Nigeria is experiencing something worse than stagflation, then the appropriate package of policies that can revive the economy is significantly different from that being proposed by government, external donor agencies and by the organized private sector to tackle recession.

Recognizing the causes of the current Nigerian economic predicament is a major step to resolution. Some of these causes are policy mistakes of previous and present governments, wrong attitudes of Nigerians to production and consumption, and a curious tendency of accepting policy advice from stakeholders who place their individual interest over that of the country. We shall be specific.

  1. Failure to refine crude petroleum at home due to constant breakdown of the four refineries;
  2. Excessive importation of food and other agricultural inputs which Nigeria is well suited to produce, due to irrational dependence on shared oil revenue;
  3. Continued depreciation of the naira exchange rate which propels cost-push inflation arising from imports; especially petroleum products, industrial inputs and food;
  4. Sustained tight monetary policy implicit in high and rising interest rates which discourage investment by small and medium-scale enterprises;
  5. Recent trend of introduction of new taxes at Federal and State levels which is a leakage from the national income stream as it discourages production and consumption;
  6. Failure of the National Assembly to pass the Petroleum Industry Bill (PIB) which is expected to liberalize the downstream segment of the Petroleum and Gas sector with huge potential to increase output, incomes and employment;
  7. Failure of the political party in power, past and present, to restore a proper federal structure with considerable devolution of powers to federating states which was destroyed when the military overthrew the First Republic in 1966. All federal governments have resisted the restoration of the federal system that provided a solid foundation for stability, peace and mutual respect during the First Republic. Current political discontent and agitation in oil-producing states resulting in destruction of production and pipeline facilities reduces output of crude oil and gas, in the process destroying the environment, reducing earnings of foreign exchange as well as electricity supply. The solution to the constitutional problem is negotiation among the geopolitical regions, and definitely not the militaristic approach adopted by the Federal Government in 2016.
  8. Shortcomings in the implementation of The Treasury Single Account (TSA) which suddenly drained large sums from the commercial banks with adverse effects on liquidity, lending capacity, employment in banks and solvency, and increased exposure to bank distress.

Current economic problems arise from WRONG exchange rate policies adopted since 1986 under the Structural Adjustment Programme (SAP). Before then, the country operated a fixed exchange rate regime which provided a stable environment for the country to attain middle-income status during the Gowon Regime. Proponents of SAP and flexible exchange rate system argued that the naira was “over-valued”. From the initial exchange rate of N1= $1 in 1986, the exchange rate has deteriorated to N310.00= $1.00 on the inter-bank market and N475= $1 in the parallel market as at October 5. The orthodox theoretical argument is that depreciation of the national currency raises domestic prices, improves the balance of payments position and increases gross national income. But empirical results of depreciation of the naira indicate that the policy reduces national income as well as worsens the balance-of-payments position. This confirms the position taken by experts that the Nigerian foreign exchange market is unstable. The implication of this is that to obtain the desired results of improved balance of payments position, increased national income and reduction in the rate of inflation, the country should find a way to appreciate (raise the value of) the naira. This would involve devising policies to tackle destabilizing speculation against the naira, increase exports and devise a strategy of taming the parallel foreign exchange market by integrating it with the Bureau De Change and subjecting it to Central Bank control. Appreciation of the naira then results in lower rate of inflation increased national income and improved balance of payments position.

Nigerian monetary policy has been restrictive since the introduction of SAP. The Central Bank, in its inflation-targeting strategy of monetary policy, regularly mops up so-called excess liquidity by selling securities to banks, resulting in rising short-term interest rates. This discourages lending and makes the structure of lending interest rates prohibitive to investors. This works against increased national output and employment. The assumption of the Central Bank is that lending is for consumption, which would have been tenable if the inflation was demand-pull. In cost-push inflation, rising short-term interest rates, in addition to reducing output, may also compound inflation. In the current Nigerian situation, easy monetary policy is preferred.

Fiscal policy should be significantly restructured. Government’s commitment to increasing non-oil revenue should continue. The percentage of expenditure on recurrent items should be reduced while capital expenditure is significantly increased to accommodate additional infrastructural facilities. In the short run, budget deficits should be employed to expand national income and employment opportunities. Sale of national assets should not be considered.

In this era of globalization, application of new technologies, particularly ICT and the development of entrepreneurial capabilities make a country more competitive in world markets as well as increase the productive capacity to satisfy domestic demand. This policy, working closely with fiscal policy, increases national income, improves the balance-of-payments position and reduces inflation.


  • Paper delivered by Professor Osagie on behalf of recipients of honorary degree awarded at the 42thgraduation ceremony of the University of Benin, November 26.