Abstract
This paper is an effort to investigate the economic justification for the adoption of the proposed policy of currency restructuring by the monetary authority in Nigeria. In order to fulfill this objective, this paper reviewed the impacts of similar policy on the Nigerian economy over the period 1970-2010 by employing a descriptive approach of analysis using percentages, graphs and tables. The results from this study show that such policy is inflationary induced and it causes deviation of actual inflation and money supply from target level as well as results to excessive supply of money. More also, such policy makes the growth rate of money supply to exceed the growth rate of out put. However, such policy has a tendency of improving and worsens the performance of the external sector and the capital market depending on the differences in the growth rate of inflation and out put in the economy. Therefore, this study suggests that if the Nigerian monetary authority decides to adopt this policy, commitment must be made to maintaining price stability, target money supply, develop ways to increase government returns and returns in the capital market, avoid capital flight as well as mechanism must be established to prevent the underlying structural bottle neck associated with the economy from negating the objectives of this policy.
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