Monetary sterilisation index, Foreign asset, Domestic asset, Central Bank of Nigeria, Monetary policy.


This study attempts to estimate the extent of sterilisation undertaken by the Central Bank of Nigeria (CBN) during the period from 2000 to 2016. The approach used in this study involved construction of a monetary sterilisation index by measuring the rate of change in domestic asset (net) with respect to the change in foreign asset (net). The index expands the menu of available indicators which may be considered by monetary policy makers in in evaluating policy response to changing economic conditions. The paper after its introduction reviews the literature on monetary sterilization is aimed at ensuring that the balance sheet of the monetary authority is optimized to keep inflation under control. To measure the extent of CBN sterilization operations, the study adopted the methodology applied by Cavoli and Rajan (200s), Glick (2008) and Cardarelli et al. (2009) which seeks to evaluate the linear relationship between net domestic assets and net foreign assets. The study used monthly data on inflows from January 2000 to March 2016, sourced from the Central Bank of Nigeria Statistical database. The study found an inverse trend between the trend and both inflation and exchange rate of the Naira.

Author Bio

The authors are staff of the Central Bank of Nigeria.

Publication Title

CBN Bullion





Included in

Finance Commons



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