Impact of Central Bank of Nigeria (CBN) Cashless Policy on Financial Liberalization of the Nigerian Economy

Abstract

Financial repression, as argued by McKinnon and Shaw (1973) is the existence of interest rates ceilings, high reserve ratios, regulated lending, restriction to entry and exit in the banking activities, restriction of foreign currency transactions, and directed ceilings in an economy. In summary, it is when the government imposes control over financial sector activities causing decrease in savings, discourage investment, lack of investment in an economy will lead to a retarded economic growth. This paper looked at the impact made by the cashless policy on the financial liberalization of Nigerian economy. It was observed that from available information, the policy of cashless transaction has greatly impacted on the financial liberalization of the Nigerian economy. The writer aligned with the view of Mckinnon-Shaw 1973 in this explorative review and concluded that the components policies necessary for the effective application of cashless transaction society is yet to be fully implemented. The government needs to follow strictly the initiative and reduce regulatory restriction in the operation of a cashless society to attract private operator in order to have free market interaction necessary for adequate financial liberation and economic growth.