According to  Onyido (1991), Monetary Policy could be defined as the combination of measures designed to regulate the supply of Money to an economy. Specifically, it is designed to the availability (or quantity), cost, and direction of credit in order to attain stated national economic objective.
Monetary policy usually involve the expansion or contraction of money supply, the manipulation of interest rates to make borrowing easier and cheaper or more difficult a dearer depending on prevailing economic condition and channeling of fund to growth sectors for increased to put monetary policy is an integral part of the overall economic policy that regulates the level of money or liquidity in order to achieve some desired policy objective it ensure that the supply of money and cost of credit to an economy is adequate to support desirable and sustainable growth without generating inflationary pressure that could lead to undue  depreciation in the value of the local current. A country’s   monetary policy is usually economy the monetary system adopted in the economic.
Generally of monetary policy, include:-
(1)    The control of inflation and maintenance of relative price stability.
(2)    The maintenance of a healthy balance of payments Position  for the country in order to safeguard they external value of the national currency.
(iii) The promotion of a fast and desirable rate of economic growth and development.
(iv) The maintenance of a low level of unemployment.
(v) The mobilisation of increased domestic savings to facilitate domestic capital formation.
(vi) Increasing the flow of credit to the priority sector of the economy especially the agricultural and manufacturing sector.
Other broad objectives of n policy in Nigeria include protecting local from unfavourable foreign competition and smugglers, reducing indebtedness aboard and generating more revenue especially from the non – oil sectors of the economy.
Because conflicts do arise when all these objective are pursued simultaneously, choice has to be made by the authorities as to which objective(s) to lay emphasis upon at any point in time and the type of instruments tote adopted in the achieving the selected objective(s).
It is therefore, clear that some of the objectives of monetary policy are only achieve at the sacrifice of others. For instance, there is a trade off between inflation and unemployment i.e the goal of full employment conflicts with the goal of stabilisation of domestic prices. An adverse balance of payments may require a restrictive policy which is not always conducive or appropriate to the domestic situation – balance of payments deficits can be narrowed by reducing national output. This tends to contradict the objectives of full potential output and balance of payment equilibrium.
Also there is possible strain’ between the objectives of growth and external balance. Growth increase the demand for import, capacity to produce exports and import substitution. Invariably; growth will bread deficits in the external balance of the countries with higher propensities to import.
However, certain economic objectives are mutually reinforcing. Thus, full potential output and economic growth are compatible objectives
The main techniques by which a Central bank may achieve policy objectives could be grouped into two for simplicity.
They are (I) market intervention and (ii) portfolio constraints. The Market Intervention relies on the power of the Central bank as a dealer in financial assets in the financial markets to influence the availability and the rate of return on assets in a general way, thus affecting both the desire of the public to hold money balances and the willingness of banks to take deposits and lend. Portfolio Constraints, on the other hand, place restrictions on a particular group of Institutions (banks) limiting their freedom to acquire assets and liabilities according to Crocket (1973).
Ranlett (1969) as cited by Onyido (1991), Classified Monetary Policy Instrument into quantitative and qualitative tools. Quantitative tools operate primarily by influencing the cost, volume and availability of bank reserves and thereby the supply of credit. Their effect is general, impartial and impersonal The instruments: Open Market Operations (OMO), Discount Rate Policy; and legal Reserve Requirement. Thee are indirect tools of credit control. Qualitative tools on the other hand; typically, seek to regulate the demand for credit for specific selected users, and therefore are selective in nature. The emphasis here is on direct credit control. These instruments are discussed as follows:
Open  Market Operations (OMO)
This  is the buying and selling of government securities e.g. development  bonds, treasury bills, treasury Certificates etc. in open market by the Central Bank of Nigeria (CBN), on the behalf of Federal Government of Nigeria, with the intention to control the quantity of money.
With this tool, a policy of monetary expansion or contraction is carried out by altering the reserve base of the commercial banks thereby enhancing or limiting their credit creating capacities.
If the policy pursued is expansionary, the CBN purchases government securities from the Public made up of individual, Business Organisations etc with CBN cheque. These individual and Business Organisations lodge these CBN cheque to their respective accounts with commercial banks.
The implication is that the cash base of the commercial banks increase by the amount of credits from Central Bank. This makes it possible for the Commercial Banks to lend money and thereby create money.
If on the other hand, the policy pursued is contractionary then the opposite holds. That is to say, that the CBN sells Securities in the market to the public. The public rush for payment by drawing cheques on their accounts with the Commercial Banks. This action tends to reduce the reserve base of the Commercial banks and thus limits the ability to lend to the public.
In a t Developed Economy, Open Market Operations have two Impacts on the Financial System. First, the immediate effect of a purchase (Sale) of securities is to increase (decrease) the reserve base dollar for dollar. In America, the Federal Reserve System (CBN in the Case of Nigeria) does not Conduct Open Market Operations to make profit and will simply bid up the price on securities to a high enough level to purchase the securities from either banks, bond dealers or individuals.
The question is where does the Federal Reserve System get the Money. It simply “creates” the funds to purchase I the securities by increasing the reserve accounts of the 1 banks involved in the transactions. In the same vein, the
Federal can continue to sell any amount of securities it possesses because it will continue to lower the price until :1 the securities are purchased.
Second the effect of the Federal as the net purchaser or seller of securities shifts the demand or supply function of securities in the open market and immediately affects bond prices and interest rates.
In developing economy, like Nigeria, the effectiveness of this instrument is highly constrained because of the undeveloped nature of our money market and capital market. People in rural areas do not have ideas of the workings of treasury bills and treasury certificates.
Therefore, public subscription is limited because of poor education of financial market investment and availability of alternative and probably more attractive investment channels.