What governments via central banks, have power over, is inflation, it is inflation which in turn drives bank interest rates. Government has no direct power over interest rates, only inflation. It is the commercial banks that receive deposits at different rates and give out loans at higher rates to make profit. If you control your central bank then you control your inflation fully. In the Eurozone for instance, no single country controls inflation, it is done in Brussels the seat of the European council. In ancient Yoruba land, government did not control inflation since there was no central bank. Cowry shells were used which are picked for free on the coast.


If ECOWAS used a common currency, that currency will not be inflated anyhow according to the finances or whims and caprices of the government of any member nation like Nigeria. It is reckless pumping of liquidity into the economy that has made the Naira worthless. 30 years ago, a hundred naira per month salary was a huge salary, equivalent to up to 200,000 naira today, if not more, because back then, a brand new state of the art Peugeout car equivalent to a Peugeuot 607 today maybe around N3,000. I believe no other country's currency has been inflated so much within so short a period. How did N3000 in 1985 become equivalent to N6 million today if not by money printing?. Money all over the place but little value. That is inflation. So far nobody is printing your money for you apart from your Central bank, then nobody is causing your inflation apart from your CBN who do it on instruction from your government.


If I bring 1 million dollars into the country Nigeria from the US where inflation is 5 percent to here where it is 17 percent, then net inflation is 12 percent which means my capital must earn well over 12 percent interest before I will invest it in your economy, else I will eventually lose the capital to erosive inflation. Inside the country, when more money is printed, the price of goods will rise, other things being equal, because there will be higher demand due to more money in circulation. Look at a scenario where people buy all garri in the market because they have more money and only yours is left, it means you will increase your price. That is the principle of high liquidity causing prices to soar, however people like me on a fixed salary are stuck. The price of everything will rise with inflation, including the cost of capital.


A government depending majorly on forex income will always have reasons to inflate or deflate the currency depending on whether or not the forex comes in as at when due and in expected volumes. That is basic common sense. If you were expecting 100 billion dollars and you see 150 billion dollars, then you change them to Naira to offset your Naira bills, you will not use your central bank power to print money just then, so your local currency will rise in value or stabilize with reduced inflation but if you budget 100 billion dollars and receive 50 billion dollars, you will print money to offset your bills and inflation will rise and the value of the currency will drop.


This applies to Russia, Saudi Arabia, Venezuela, Nigeria, Equatorial Guinea and other forex dependent governments. The most important of which is Russia.


It can not apply to a Yoruba country of 100 million people with 35 million workers having income in the local currency and paying income tax in that currency. No it can not.

Will read later