The Central Bank of Nigeria (CBN) on Monday, clarified that contrary to speculations, its Central Bank Digital Currency (CBDC), also known as the eNaira, doesn’t in any way constitute a threat to the country’s financial stability.
The central bank’s clarification came against the backdrop of news reports and analysis in some traditional and social media platforms, suggesting that the digital currency had the potential to distort financial stability.
However, in a statement, CBN Director, Corporate Communications, Dr. Isa AbdulMumin, said after carefully reviewing the reports, which appeared to have been syndicated, there seemed to be a lack of understanding of portions of the foreword, and some articles, in the CBN’s recently released “Economics of Digital Currencies: A Book of Readings”.
The CBN noted that a recurring theme in the book was the interest of regulators, namely the apex bank, in the role of cryptocurrencies as speculative investments, and the potential threat they harbour for financial stability.
Pursuant to that, the articles in the book provided an in-depth understanding of CBDCs generally and the workings of the eNaira in particular, highlighting issues and challenges in implementation and adoption.
According to AbdulMumin, “One of the media reports speaks of ‘concerns about Nigeria’s central bank digital currency, eNaira, indicating potential risks to financial stability despite its success in narrowing the country’s financial inclusion gap’.
“The nexus implied is unconvincing. In the ordinary course of things, the CBN does not join issues on news commentary; however, we are constrained to clarify the reports to ensure that misunderstandings are not fostered.”
He said, “The eNaira structure continues to evolve and undergo modifications targeted at improving the user experience across all interfaces.
“We encourage Nigerians to embrace the technology for, amongst other things, greater financial inclusion.”
The central bank had as part of the eNaira enlightenment campaign, explained that the digital currency was aimed at deepening the country’s payment system, and not to either replace or compete with existing banking brands.
Only recently, the apex bank approved the eNaira as a payment option for recipients of diaspora remittances.
The bank said the move was in furtherance of efforts to liberalise the payout of diaspora remittance.
Essentially, the eNaira was unveiled on October 25, 2021, by former President Muhammadu Buhari in line with the CBN’s efforts to enhance the payment system and boost transactions.
Its launch was expected to propel the country’s Gross Domestic Product (GDP) to rise by $29 billion in the next 10 years.
Nigeria was the first country in Africa and one of the first in the world to introduce digital currency which differs from cryptocurrency in that while the former is regulated, the latter is not and poses risks to the global financial system.
James Emejo
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