Professor Valentine Omubo-Pepple of Rivers State University (RSU), Port Harcourt, has attributed the economic recession witnessed in Nigeria to the nature of the monetary policy that permits excessive liquid cash kept at home.
Speaking with The Tide yesterday in Port Harcourt in an interview on the state of the nation’s economy and other issues, Omubo-Pepple said that in order to restart a general down turn in the business sector, aggregate demand had to rise, and this would happen only when there is the regular flow of income.
Omubo-Pepple who is the dean, Faculty of Sciences of the institution, said that the effects of keeping money outside the banking system had made commercial banks not to perform their obligatory financial intermediate functions optimally between the customers and financial institutions.
According to him, “the capacity of banks to create money and stimulate the economy is constrained as the size of funds available to lend is severely affected”.
He maintained that monetary policy is made more difficult for the apex bank when it has little or no control over money circulating outside the banking system, adding that people keep money at home to meet emergencies and for other purposes.
Omubo-Pepple stressed that cash is the most liquid asset and therefore easy access to cash could be a motivation for keeping such cash at home rather than depositing in the banks.
The University don also said that a man with questionable means of livelihood would rather shun the banks and store his liquid cash in his home, noting that some people had apathy for putting money in the bank which he described as common if the savings rate was low to generate interest on such savings account.

Bethel Sam Toby/Peace Ihedoro