The research work tends to examine crucially the impact of monetary policy on the reformation of the financial sector of the Nigeria economy. In this research work, the researcher intends to look at how various effective monetary tools such OMO(open market operation) special deposits moral suasion, bank rate etc, will be used by the central banks of Nigeria (CBN) and other financial institution to curb or curtail inflation affecting the economic growth and development in the country. There have been so many writing as regard the impact of monetary and fiscal policies or restructuring of the financial sector of Nigeria. These funding will be useful in providing recommendation and different techniques in easing the problems associated with banking sector in the country. A prolongs inflation in a country like ( Nigeria ) were too much money chasing few goods speedily drag an economy to recession and with that the monetary disrupt the balance of payment equilibrium the informational seen trade so it is paramount importance why the apex bank effortlessly confines to monitor and regulates the activities of the financial institutions. The research work tends to cover as much as possible all aspect of monetary policy with much emphasis and relevance to the Nigerians the financial sector.
1.1 BACKGROUND OF STUDY
Monetary policy has central role in macroeconomic management, primarily because of the close relationship between the monetary aggregate and economic and economic activities. This is true irrespective of whether one considering the monetarist or Keynesian frame work.
The monetary framework of an economy is definitely a scientific device but its application appears to be more of an act in practice, many factor other than the logic of the theoretical framework, comes into play, one of the key determinant of the types of monetary management is the economic environment , although it may be derivable to introduce some monetary instrument , the environment for their effective use may not be suitable, this fact should be born in mind as well as the subject of monetary policy impact on the financial sector of Nigerian economy over the past decades, the shift in the approach to economy management from direct government control to market base policy having gain momentum, both in the industry and developing countries. The deriving force has been the desired for enhanced efficiency in the mobilization and utilization of resources.
In this context, an increasing number of countries have embarked on upon a comprehensive adjustment design to promote a macro- economic environment and also provide a versatile institutional arrangement necessary for free market economy.
An important element of this adjustment process is the financial sector reforms that will help to establish a solid formation for effective implementation of market based monetary policy. The effectiveness of this adjustment to an improvement in Nigeria economy is what border this researcher and by that seeking for adequate solution to the solution to the problem
1.2 STATEMENT OF THE PROBLEM
The general fluctuation behavior and distress witnessed in the financial sector of Nigeria is one general issue that has been of a source of concern to an average Nigeria analyst and hence have sought for means of a better financial cycle with excellent operation especially in the banking sector.
It is the plan of the study to give sufficient background on the already evolved monetary policy in Nigeria so as to present a clear picture of the effort to introduce open market operation or to fund a solution to distress economy as an instrument of reforming the Nigeria financial sector.