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According to Fisher’s quantity theory of money, the value of money depends on the quantity of money in circulation in the economy and the relationship between this two is inverse.
That is, if the quantity of money in circulation is doubled, the value of money will be halved (or the price level. will be twice as high as before).
The first reason is transaction demand, which means that people need money to buy goods and services in their daily lives.
The second reason is speculative demand, which means that people hold money to take advantage of changes in interest rates or asset prices in the future.
The third reason is precautionary demand, which means that people hold money as a buffer against unexpected expenses or emergencies.
Monetary policy is a tool used by central banks to influence the economy, and it involves the use of various instruments.
These instruments can be broadly grouped into two categories: quantitative or general methods, and qualitative or selective methods.
The Nigerian Money Market is an important part of the Nigerian financial market. It is the market where short-term and liquid financial instruments are traded. The Money market provides an avenue for individuals, businesses, and governments to access funds that will help them meet their short-term needs. In this post, we will explore the aims, […]
Inflation redistributes real income and wealth arbitrarily
When the inflation rate increases, the purchasing power of the currency decreases because the prices of goods and services will increase.
This means that people who have saved money or have liquid assets like cash will be negatively affected as the value of their assets will decline in real terms.
On the other hand, people who own tangible assets like real estate, stocks, or precious metals are less affected by inflation.
This is because the prices of these assets tend to rise with the inflation rate, or even faster than the inflation rate.
So, people who own such assets will actually see an increase in their wealth during inflationary periods.
Therefore, inflation redistributes real income and wealth arbitrarily, as it imposes a tax on those who hold money in cash or liquid assets while favouring those who hold real assets.
The Nigerian Money Market is a critical component of the country’s financial market.
It is the market where short-term securities like treasury bills, certificate of deposits, are traded.
Several institutions participate in the Nigerian Money Markets. These institutions are the commercial banks, the central bank of Nigeria, merchant banks and discount houses.
In this post, we will take a closer look of these institutions and their contributions to the Nigerian Money market.
The Nigerian money market is an important component of the financial system of Nigeria.
It is part of the Nigerian financial system where short-term securities or liquid securities are bought and sold.
In other words, the money market is the market where short-term debt instruments are traded.
Many instruments are traded or have been traded in the Nigerian money market.
They include treasury bills, treasury certificates, commercial papers, certificates of deposit, stabilization securities, banker unit funds, and eligible development funds.
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