The Governor of the Central Bank of Nigeria , Professor Chukwuma Soludo has said that the dwindling fortune of Nigeria'a Capital Market was as a result of divestment by institutional investors.

According to Soludo,the reason for the downturn is simple, "giving the credit crunch in the advanced industrial world, several of the institutional investors in those markets began to pull out of our own markets. That is the origin of our own crisis here because unless we understand it, we will go on to what went on in this country for about five months".

People, he said, were just busy not discussing the problem but looking for scapegoat, "maybe somebody stopped the margin trading, maybe common year ending, they were just looking for scapegoat and not advancing the problem".

Making these remarks last Thursday at the ThisDay Townhall meeting held in Abuja, the Governor also observed that the origin of the problem was the credit crunch that started globally and the institutional investors were then pulling out in order to service their facilities else where which adversely affected the prices of stock.

He stressed that most of the investors in the Nigerian market who were new and there for the short shine, mostly for speculative purposes, began to sell. "That triggered off two quick reactions. The first reaction was the panic response on the part of all the stakeholders, the banks panicked by calling in the existing facilities, the participants in the market panicked by also selling quickly to repay their loans", he further argued.

"And so you found a serial where the banks stopped new credit line going into the market, they were calling in existing facilities and those who were already panicking wanted to get out of the market and there was only one way the market could go, and that was to decline.

And I think it is very important that we understand how we got to where we are in other for us to begin to think about how we can make progress", Soludo added.

The Governor also stressed that no two economies are the same and therefore the model or methods used to intervene in time of financial difficulties like now differ from one country to the other.

"There is no one model as to how countries intervene. No two economies are the same. You could have general principles but the magnitude, the content and the specifics of the interventions will have to be specific to specific circumstances".

On how and when Nigeria should intervene, he said, "I want to say that in theory, government intervenes when you have market failures. There are various forms of market failures. when you have these market failures; government do intervene everywhere and which is more like saying that almost always in all circumstances in every country you have certain degrees of market failures, so governments will always intervene".