Nigeria e-Naira on Devices Photo: CBN

e-Naira: IMF commends CBN on digital currency, cautions against related risks

*The International Monetary Fund warns the Central Bank of Nigeria ‘there is a need to manage cybersecurity and operational risks associated with the e-Naira’

Alexander Davis | ConsumerConnect

The International Monetary Fund (IMF) has applauded the Central Bank of Nigeria (CBN) for evolving the e-Naira as the country’s Central Bank Digital Currency (CBDC), and the enumerated benefits of the e-Naira, especially for Nigerians overseas with low transfer fees when sending money home.

It was learnt the IMF also cautioned the Bankers’ Bank to anticipate the risk that e-Naira may pose to the financial and economic stability of the country.

The Fund stated: “The e-Naira is expected to lower remittance transfer costs, making it easier for the Nigerian Diaspora to remit funds to Nigeria by obtaining e-Naira from international money transfer operators and transferring them to recipients in Nigeria by wallet-to-wallet transfers free of charge.

“Nigeria is among the key remittance destinations in sub-Saharan Africa, with remittance receipts amounting to $24 billion in 2019.

“Remittances typically are made through international money transfer operators (e.g., Western Union) with fees ranging from 1 per cent to 5 per cent of the value of the transaction.”

The IMF further noted “like digital currencies elsewhere, the e-Naira carries risks for monetary policy implementation, cybersecurity, operational resilience, and financial integrity and stability.

“For example, e-Naira wallets may be perceived, or even effectively function, as a deposit at the Central Bank, which may reduce demand for deposits in commercial banks.

“There is a need to manage cybersecurity and operational risks associated with the e-Naira.”

The Fund as well noted that “the IMF is ready to collaborate with the authorities on data analysis, cross-country studies, sharing the e-Naira experience with other countries, and discussing further evolution of the e-Naira including its design, regulatory framework, and other aspects.”

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