Thursday , December 9 2021
CBN Sets Up Committee for Nigeria's Digital Currency

CBN Sets Up Committee for Nigeria’s Digital Currency

…Experts Support Digital Currency Initiative

Nigeria’s apex regulatory bank, Central Bank of Nigeria (CBN) has disclosed its plans for Nigeria to create its digital currency.

The governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said this while addressing journalists after a two-day meeting of the Monetary Policy Committee in Abuja.

He aasured the idea of a digital currency would soon become a reality in the country, and that the central bank has already set up its committee, which is working on the concept.

The CBN Governor also made use of the opportunity to address the recent trends of growing volatility and value decline in the cryptocurrency market, taking a swipe at the recent fluctuations that have rocked the market as a result of Tesla’s CEO, Elon Musk changing predilections. Godwin was quoted as saying:

“We saw the market collapse. Initially, when Elon Musk tweeted around the time when we said our banking and payment facilities are no longer available for cryptocurrency transactions and he tweeted that he will invest $1.5 billion and the price (Bitcoin) went up. He now tweeted and raised a few concerns and the thing (Cryptocurrency) plunged.”

Before the ban, Nigeria ranked third on the list of countries with the highest volume of transactions, churning out over $400million worth of trade in 2020.

Despite the ban, Nigerians continued to show unwavering interest in all forms of digital assets, using them both for daily trading and as means of asset storage, as inflation, soaring taxes, ill-timed devaluation and foreign debt continues to batter the local naira to waning relevance, both locally and internationally.

Reacting to this, the Head of Economics Department, Pan-Atlantic University Lagos, Dr Olalekan Aworinde, said, “When you have a digital currency in place, the implication is we would use less of the naira, particularly because of improved financial transactions. If people do not demand the naira, its value is likely to reduce.

“Also, if we adopt a digital currency, it will affect the total money in circulation. A narrow money supply occurs. When the demand for the naira is more than its supply, the value of the naira would rise. But inflation is not our friend, it is on the increase all the time. So, we cannot easily gauge if the value of the naira would improve because of this.”

He added that if the CBN were to float a digital currency, it would be a step in the right direction.

ALSO READ: China Bans Financial Institutions from all Cryptocurrency Business

Aworinde said, “When ATMs were first introduced, it was met with great scepticism. But now, nearly every household has an ATM card. People do not carry as much cash as they used to before. It also created jobs for some people. Although for this to be seamless, the government will have to increase its investment in cybersecurity.”

A financial planning expert, Mr Kalu Aja, said floating a digital currency could help boost remittances into the country.

“A central bank’s digital coin is a stable coin, which means it is backed by dollar reserves. If the CBN allows Nigerians offshore to remit using a CBN stable coin, it will create a vibrant secondary market for digital naira,” he said.

When asked if Nigeria was ready for a digital currency he said, “Yes Nigeria is ready. The Nigerian bank payment system is amongst the best in the world.”

The Chief Executive Officer of KoinWa, a cryptocurrency platform, Hakeem Disu, believes this move would strengthen the naira and revolutionise the country’s financial industry.

He said, “Digital currency is basically about strength in numbers. Nigeria just needs to position itself in the cryptocurrency space ahead of other countries, considering the fact that the nation is the second-largest bitcoin hub in the world, according to data from last year.

“And another thing is CBN needs to work with the people already in the space, especially the ones in exchanges as they are well-grounded in blockchain technology. It is an extraordinary move that might help banking cut down on operational costs.”


About Bukola Olanrewaju

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