HomeAfrica EconomyIMF’s wariness notwithstanding, Nigeria’s Central Bank goes digital (crypto...

IMF’s wariness notwithstanding, Nigeria’s Central Bank goes digital (crypto currency), appoints technical partner; to launch out in October

The Central Bank of Nigeria (CBN) yesterday announced the formal engagement of global fintech company, Bitt Inc., as technical partner for its proposed digital currency, also known as e-Naira

Notwithstanding the advice for caution from the International Monetary Fund (IMF) to countries seeking to adopt the digital currency, warning that the demerits of adopting crypto-assets as national currency outweighed its merits, The Central Bank of Nigeria (CBN) yesterday announced the formal engagement of global fintech company, Bitt Inc., as technical partner for its proposed digital currency, also known as e-Naira.

Disclosing this in Abuja, the CBN Governor, Mr. Godwin Emefiele, said the Central Bank Digital Currency (CBDC) would bring about increased cross-border trade, accelerate financial inclusion, and lead to cheaper and faster remittance inflow. He said the digital money, also known as cryptocurrency, would lead to easier targeted social interventions, as well as improvement in monetary policy effectiveness, payment systems efficiency, and tax collection, according to THISDAY report.

CBN’s Director, Corporate Communications Department, Mr. Osita Nwanisobi, explained, in a statement, that the e-Naira project had been a long and thorough process for the apex bank following its resolve in 2017 to digitize the local currency after extensive research and exploration.

Nwanisobi said CBN’s decision was in line with an unmistakable global trend in which over 85 per cent of central banks were considering adopting digital currencies in their countries.

The CBN pointed out that the selection of Bitt Inc. from among highly competitive bidders was based on the company’s technical competence, efficiency, platform security, interoperability, and implementation experience.

“Bitt Inc. was key to the development and successful launch of the Central Bank Digital Currency (CBDC) pilot of the Eastern Caribbean Central Bank (ECCB) in April 2021,” Nwanisobi stated.

Further clarifying the e-Naira project, the CBN governor had said, “You have some naira in your account and you chose to convert part of your naira into a digital wallet by way of a digital currency. We will support that.

“So you go to your bank, you have N10 million and you want to move N2 million out of your N10 million into a digital currency.”

“They’ll debit your account and move it to your wallet of N2 million digital currency, which you can spend across countries.”

Emefiele added, “So we think that this is a noble idea and we are not the first…many other central banks are at advanced stages of revealing their own digital currency.”

“Our own digital currency, which is tagged e-Naira, will certainly come into operation, by the special grace of God, by October and we are working very hard for this.”

 “The Nigerian economy, just like the rest of the world, is going digital and cash cannot play in that space. Therefore, e-Naira, which will represent the digital equivalent of cash, will be used as the fiat currency to effect transactions.”

However, IMF stated that the potential benefits were not a straightforward process, as it required significant investment as well as difficult policy choices, such as clarifying the role of the public and private sectors in providing and regulating digital forms of money.

The IMF stated, “We believe, however, that in most cases, risks and costs outweigh potential benefits. Crypto-assets are privately issued tokens based on cryptographic techniques and denominated in their own unit of account.”

“Their value can be extremely volatile. Bitcoin, for instance, reached a peak of $65,000 in April and crashed to less than half that value two months later.

“And yet, Bitcoin lives on. For some, it is an opportunity to transact anonymously—for good or bad. For others, it is a means to diversify portfolios and hold a speculative asset that can bring riches but also significant losses.”

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