E-Naira: IMF Says CBN Needs To Manage Operational Risks Of Digital Currency

BoomRadioNG | November 17, 2021

The International Monetary Fund (IMF) has urged the Central Bank of Nigeria to watch the product with a view to properly managing risks that may arise from the initiative.

On boosting remittances, the fund said, “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 with fees ranging from 1 per cent to 5 per cent of the value of the transaction.

The unveiling of the new central bank digital currency, eNaira today by the president, Muhammadu Buhari. Also present at the unveiling were Vice President, Yemi Osinbajo, CBN Governor, Godwin Emefiele

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

“Exchange rate reforms, including a unified market-clearing rate, that reduce the gap between official and parallel market exchange rates would enhance the incentives for using eNaira wallets to send remittances.”

On the risks, the IMF 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.”

The Fund however said it was available to help with technical assistance and policy advice.

Ademola Adejuwon