ABSTRACT
Internal convertibility relates to free conversion by the citizens of a country, whereas external convertibility relates to the ability of foreigners to convert a local currency earned through trade or through investment into any foreign currency of their choice without let or hindrance by the local monetary authorities. By the 'golden' rule of the exchange standard full convertibility existed between the West African Currency Board pound note and the British pound sterling and there were no restrictions whatsoever on the amount one could convert or reconvert. One of the functions of the Bank as contained in the Central Bank's Act 1958 is the issue of legal tender notes and coins. Consequently the Bank issued the Nigerian pound notes which replaced those of the West African Currency Board. The 1968 replacement and the denial of convertibility were to make foreign-exchange transactions difficult for the seceding Biafrans who desperately needed foreign exchange for the purchase of arms.
