CBN Digital Currency Will Deepen Financial Inclusion, Says FDC

Earlier this month, the Central Bank of Nigeria announced that it plans on launching a digital currency before the beginning of 2022. The disclosure was made by Information Technology Department Director – Rakiya Mohammed, during an online news briefing at the end of the Bankers Committee meeting. According to her, the Central Bank of Nigeria has been exploring the technology for the past two years and has made significant progress in that aspect. “Before the end of the year, the Central Bank will be making special announcements and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace”, she said specifically.

In its report, the FDC said that “Nigeria is set to follow the global trend as it plans on launching its digital currency by year end. Unlike crypto, digital currencies are regulated by central banks, thus giving them some level of control on the financial system. On a positive note, virtual currencies would facilitate smooth financial transactions and eliminate bottlenecks associated with the use of cash (mutilated notes, forgery, cash handling charges, shortages). It will also deepen financial inclusion and increase the velocity of circulation”.

The report, however, did not fail to highlight rising concerns of distrust in the government and government-related policies, the country’s cyber security and inadequate digital infrastructure. “All these could limit the launch and widespread use of the digital currency in the country”, the report stated.

The report also highlighted that the drop in the inflation rate in May for the second straight month contradicts the realities of the markets.

The CBN first talked about introducing a digital currency in Nigeria last month. “We have carried out our investigation and we have found out that a substantial percentage of our people are getting involved in cryptocurrency which is not the best. Don’t get me wrong, some may be legitimate but most are illegitimate. Under cryptocurrency and Bitcoin, Nigeria comes 2ndwhile in the global side of the economy, Nigeria comes 27th. We are still conducting our investigation and we will make our data available”, CBN Governor – Godwin Emefiele, who seems to be a skeptic of cryptocurrency,said.

Rakiya Mohammed, during an online news briefing at the end of the Bankers Committee meeting. According to her, the Central Bank of Nigeria has been exploring the technology for the past two years and has made significant progress in that aspect. “Before the end of the year, the Central Bank will be making special announcements and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace”, she said specifically.

Analysts at the Financial Derivatives Company (FDC) have revealed in a recent report that the introduction of a digital currency will deepen financial inclusion in the country. The FDC, led by Bismarck Rewane, indicated that central banks around the world have either kicked off experiment and processes to introducing their digital currency or have shown interest in developing their digital currency. According to them, these banks have come to understand that cryptocurrency is here to stay and are developing their own digital currencies to combat the threats and limitations that cryptocurrency is associated with. These limitations include price volatility, poor regulation and these currencies being used as a way of evading tax and funding illicit activities.

In its report, the FDC said that “Nigeria is set to follow the global trend as it plans on launching its digital currency by year end. Unlike crypto, digital currencies are regulated by central banks, thus giving them some level of control on the financial system. On a positive note, virtual currencies would facilitate smooth financial transactions and eliminate bottlenecks associated with the use of cash (mutilated notes, forgery, cash handling charges, shortages). It will also deepen financial inclusion and increase the velocity of circulation”.

The report, however, did not fail to highlight rising concerns of distrust in the government and government-related policies, the country’s cyber security and inadequate digital infrastructure. “All these could limit the launch and widespread use of the digital currency in the country”, the report stated.

The report also highlighted that the drop in the inflation rate in May for the second straight month contradicts the realities of the markets.

The CBN first talked about introducing a digital currency in Nigeria last month. “We have carried out our investigation and we have found out that a substantial percentage of our people are getting involved in cryptocurrency which is not the best. Don’t get me wrong, some may be legitimate but most are illegitimate. Under cryptocurrency and Bitcoin, Nigeria comes 2ndwhile in the global side of the economy, Nigeria comes 27th. We are still conducting our investigation and we will make our data available”, CBN Governor – Godwin Emefiele, who seems to be a skeptic of cryptocurrency,said.