The International Monetary Fund, IMF, has cautioned the Central Bank of Nigeria on the unforeseeable “consequences” that could be brought about by the retail central bank digital currencies.
This was disclosed by IMF’s Managing Director Kristalina Georgieva, who expressed her concern about retail CBDCs in a May 1 interview at the Milken Institute’s 2023 Global Conference.
According to her, the retail CBDCs are considered by the IMF to have far more room for error than wholesale CBDCs.
She said, “We think that wholesale CBDCs can be put in place with fairly little space for undesirable surprises, whereas retail CBDCs completely transform the financial system in a way that we don’t quite know what consequences it could bring.”
In a report by Cointelegraph, retail CBDCs are state-backed virtual currencies issued by central banks for use by consumers and businesses while wholesale CBDCs are similarly central bank-issued but are designed to allow financial institutions to carry reserve deposits with a central bank.
The IMF MD noted that the organization was collaborating with about 50 countries to ensure best practices are adopted, which she expects to have a huge influence on banks and economies in the future.
Earlier, the IMF had announced that it would publish a CBDC handbook to help central banks with CBDC design and implementation, a decision resulting from the unprecedented levels of interest from nations around the world.
The eNaira introduction on October 25, 2021, made Nigeria one of the first countries in the world to develop a central bank digital currency available to the public.
Meanwhile, the CBN governor on Tuesday, said e-Naira transactions hit about N1.4m as of March 31, 2023.
Represented by the Director, of Policy, of the CBN, Dr Hassan Mahmoud, Emefiele said his team took advantage of COVID-19 and other developments in-country to drive the electronic payment channels.
He said, “The advent of the Corona Virus pandemic no doubt triggered rapid advancements in financial technology leading to speedy digitisation of money and finance.
“The CBN took advantage of the opportunity by launching the eNaira in October 2021. The eNaira was developed to broaden the payment possibilities of Nigerians, foster digital financial inclusion, with potential for fast-tracking intergovernmental and social transfers.
“Since its launch, the CBN has continued to modify its features to make it more accessible to a wide range of users.
“Today, one does not need a smartphone to use the eNaira as it has become compatible with all generations of mobile devices (old and new). To date, over N1.4m transactions have passed through the eNaira platform.”
Alleluia is the Assistant Editor and Content Writer at LagosPost.ng. She is a prolific writer and editor, she has written features and news stories on Lifestyle, Sports, Business, Politics and B2B marketing. She is also an event coordinator, host and social media content creator.
