Connect with us

News

eNaira may reduce deposits in commercial banks, IMF warns CBN

Published

on

Advertisement

Factual Pursuit of Truth for Progress

 

Advertisement

The International Monetary Fund (IMF) has disclosed that the eNaira wallet may function as a deposit at the Central Bank of Nigeria and reduce demand for deposits in commercial banks.

This is coming in less than four weeks after President Muhammadu Buhari, and top officials of the central bank launched the eNaira at the State House, Abuja.

Advertisement

As a result, the Washington-based fund on Tuesday warned the CBN to manage the various risks associated with the digital currency especially the threats it pose to monetary policy implementation, cyber security, among others.

The IMF disclosed this in its ‘Country Focus; Five Observations on Nigeria’s Central Bank Digital Currency.’

Advertisement

The global body said, “Like digital currencies elsewhere, the eNaira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability.

“For example, eNaira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks. Relying as it does on digital technology, there is a need to manage cyber security and operational risks associated with the eNaira.”

Advertisement

According to the IMF, the launch of the digital currency is drawing interest from the global world, and other central banks because of the size and complexity of Nigeria’s economy.

The organization added that the eNaira uses the same block chain technology as Bitcoin or Ethereum, but is not a financial asset like the two.

Advertisement

The IMF noted that the e-Naira would increase financial inclusion, facilitate remission of remittances, and reduce informality.

According to the fund, Nigeria has a large informal economy with transactions and employment equivalent to over half of the GDP and 80 per cent of employment, respectively.

Advertisement

The IMF said, “The 2021 IMF Article IV mission emphasized the need for monitoring risks and macro-financial impacts associated with a central bank digital currency. The IMF is ready to collaborate with the authorities on data analysis, cross-country studies, sharing the eNaira experience with other countries, and discussing further evolution of the eNaira including its design, regulatory framework, and other aspects.”

Advertisement

Advertisement
UNBELIEVABLE Married woman caught with another man by in-laws
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

twenty + thirteen =

Advertisement
Advertisement

Most Popular

X