The Central Bank of Nigeria (CBN), has debunked the claim that the country’s digital currency eNaira, poses a threat to Nigeria’s financial stability.
This was addressed by the CBN Director of Corporate Communications, Isa AbdulMumin, who stated that the claim represented a misunderstanding of the bank’s recently released publication, ‘Economics of Digital Currencies: A Book of Readings’.
He further stated that there was no concern whatsoever about the eNaira posing a risk to the nation’s financial stability but enhancing financial inclusion in the country.
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In his words,
“The attention of the Central Bank of Nigeria has been drawn to news items on some media platforms traditional and social suggesting that the country’s Central Bank Digital Currency (CBC), the naira, is a threat to the nation’s financial stability.
“After reviewing the reports, which appear to have been syndicated, there seems to be a lack of understanding of portions of the Foreword, and some articles, in the bank’s recently released Economics of Digital Currencies: A Book of Readings.
“A recurring theme in the book is the interest of regulators, such as the CBN, in the role of cryptocurrencies as speculative investments, and the potential threat they harbor for financial stability. Under that, the articles in the book provides an in-depth understanding of CBDCS generally and the workings of the naira in particular, highlighting issues and challenges in implementation and adoption.
“One of the media reports speaks of concerns about Nigeria’s central bank digital currency, naira, 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.”
The Central Bank of Nigeria launched the eNaira in October 2021, to improve the country’s financial inclusion with a target of 95% by 2024, and also to ensure ease of payments and reduction of cost in International funds transfer.
Last year September, the CBN reported that the eNaira recorded over 583,000 consumer wallets and about 83,000 merchant wallets downloads. It also reported over 34,000 transactions amounting to over N188 million which suggested an excellent adoption rate.
At the launch of the eNaira last year, the CBN projected that the eNaira would bring multiple benefits that would manifest as the digital currency becomes more widespread and is supported by a robust regulatory system.
One of the major benefits of eNaira is an increase in financial inclusion. Its coverage is expected to expand to anyone with a mobile phone, even if they do not have a bank account.
It is worth nothing that the eNaira uses the same blockchain technology as Bitcoin or Ethereum and can be stored in digital wallets used for payment transactions like the other two.
Also, it can be transferred digitally and at virtually no cost to anyone in the world. Unlike Bitcoin or Ethereum, the eNaira has been incorporated with stringent access right controls by the CBN.
The launch of the eNaira by the Central Bark of Nigeria is a significant step in the digital transformation of the country’s financial sector. It is expected to play a pivotal role in advancing financial inclusion, reducing transaction costs, and enhancing transparency in financial transactions across Nigeria.
However, its successful implementation will depend on factors such as infrastructure development, regulatory compliance, and public adoption.