This research work centres on CBN as a catalyst for economic development: Treasury bill as a tool for macroeconomic stability (1995 – 2012). Monetary policies serves as an avenue through which the central bank influences the state of the economy and ensuring its growth and development. There are many instruments through which the CBN can influence the economy which include; interest rate, Open Market operation, Treasury bill, reserve ratio, rediscount rate etc. But this study tries to analyse empirically how CBN use Treasury bill to affects and direct the economy on the part of growth and development. Treasury bills are government bonds sold to reduce the money in circulation and it is bought by the CBN to increase the level of liquidity in the economy and to enhance investment. In carrying out the empirical study Real GDP was regressed on Treasury bill, money supply and interest rate and from the secondary data collected from Central Bank of Nigeria (CBN) statistical bulletins to estimates the statistical relationship. The result indicates that a positive relationship between dependent variable and independent variables except interest rate that has negative impact on the dependent variable. Based on apriority expectations, the independent variables all took the expected sign and the t test shows that Treasury bill has insignificant impact on Nigeria economic development while interest rate and money supply has significant impact on Nigeria economic development. It was concluded that treasury bill has not directly impact on the Nigeria economic development within the period of investigation but exhibits partial influence through money supply and interest rate since they are both significant also it was concluded that inflation is persistent in the economy because Nigeria is operating far below full employment equilibrium and the increase in GDP does not translate to improved purchasing power because poverty index has continued to worsen over the years. This study therefore recommended that the Nigerian financial system should be made more effective in its monetary management by making all financial markets organized so as to accentuate the effects of monetary policy variables, the central bank should endeavour to improve on its current performance in producing accurate and credible balance sheet information in a timely manner, they should also estimate properly the length and variability’s of lags that affect policies, government should introduce a specification of the financial structure that is richer than the existing ones and the monetary authorities should develop a money stable policy that would propel the economy towards a positive end.
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