eNaira could cut deposits in commercial banks, warns IMF CBN
The International Monetary Fund said the eNaira wallet could function as a deposit at the Central Bank of Nigeria and therefore reduce the demand for deposits at commercial banks.
The comment came just four weeks after the President, Major General Muhammadu Buhari, and senior central bank officials launched the eNaira at State House, Abuja.
As a result, the Washington-based fund on Tuesday warned the CBN to manage the various risks associated with digital currency, particularly the threats it poses to the implementation of monetary policy, cybersecurity, among others.
The IMF revealed this in its “Country Focus; Five observations on the digital currency of the central bank of Nigeria. ‘
The global body said: “Like digital currencies elsewhere, eNaira carries risks for the implementation of monetary policy, cybersecurity, operational resilience, financial integrity and stability.
“For example, eNaira wallets can be perceived, or even function effectively, as a deposit at the central bank, which can reduce the demand for deposits in commercial banks. Leveraging digital technology, there is a need to manage cybersecurity and operational risks associated with eNaira.
According to the IMF, the launch of the digital currency is attracting interest from the global world and other central banks due to the size and complexity of the Nigerian economy.
The organization added that the eNaira uses the same blockchain technology as Bitcoin or Ethereum, but is not a financial asset like both.
The IMF noted that the e-Naira would increase financial inclusion, facilitate remittance delivery, and reduce informality.
According to the fund, Nigeria has a large informal economy with transactions and jobs equivalent to more than half of GDP and 80 percent of jobs, respectively.
The IMF said: “The IMF’s Article IV mission in 2021 underscored the need to monitor the macro-financial risks and impacts associated with a central bank digital currency. The IMF stands ready to work with the authorities on data analysis, cross-country studies, sharing the eNaira experience with other countries and discussing the future evolution of the eNaira, including its design, its regulatory framework and other aspects. ”
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