As part of the Central Bank of Nigeria (CBN) charm offensive, Folashodun Shonubi, the institution’s deputy governor, has claimed that the country’s upcoming CBDC digital currency will be a “safer option for privately issued cryptocurrencies.” ”
Payment system stability
In addition, the CBN’s digital currency – also known as e-naira – is expected to complement the current ranges of payment options. According to Shonubi, this will ensure “the stability of the payment system in the long term”.
Meanwhile, in his other remarks reported by Nairametrics, Shonubi suggested that the CBDC will have the same promises and functions as the Fiat Naira. The deputy governor stated:
Central bank digital currency offers all of the benefits of cash, but in digital form. Every single digital currency is an electronic version of cash, the legal tender. If you make a cash payment, you will be billed immediately; digital currencies bring the same promises and more with them.
Once fully implemented, Shonubi expects “rapid integration rates” in the coming days. In addition, after the completion of the CBDC rollout, the e-naira will differ from privately issued cryptocurrencies that were previously “used for investments”.
Digital currencies enable faster and cheaper cross-border transfers
Shonubi also notes that the CBN agrees with the general view that digital currencies can significantly reduce the cost of cross-border transfers. However, the deputy governor of CBN, speaking at a virtual event organized by the Chartered Institute of Bankers of Nigeria (CIBN), warns the central bank needs to watch out for risk. He explained:
“For banks in developing countries, it will improve their liquidity and efficiency in national transfers, and challenge the high cost of transfers as the world recovers from the pandemic. I believe that the era of the CBDC promotes greater opportunities and the central bank needs to be aware of and mitigate the risks. “
The CBN, which is expected to begin testing its CBDC project in October, has routinely released statements reinforcing the central bank’s desire to have a digital currency that competes with privately issued cryptos like Bitcoin. At the same time, the CBN has made a number of decisions aimed at reducing or discouraging the use of cryptocurrencies.
Despite these decisions, however, interest in cryptocurrencies continues to grow. When the rollout of e-naira begins it will be interesting to see if that translates into lower Bitcoin trading volume for the nation.
Do you agree with Shonubi’s comments on cryptocurrencies? Let us know what you think in the comments section below.
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