The International Monetary Fund (IMF) has said the eNaira wallet poses a threat to deposits in commercial banks and carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability.
It said eNaira had the potential to function as a deposit at the Central Bank of Nigeria (CBN) and, consequently, reduce demand for deposits in commercial banks.
The Washington-based institution in its ‘Country Focus; Five Observations on Nigeria’s Central Bank Digital Currency,’ 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.”
IMF further said the launch of the digital currency was drawing interest from the global world, and other central banks because of the size and complexity of Nigeria’s economy.
It pointed out that the eNaira uses the same blockchain technology as Bitcoin or Ethereum, but is not a financial asset like the two, and added that e-Naira would increase financial inclusion, facilitate remission of remittances, and reduce informality.
According to the fund, Nigeria has a large informal economy with transactions and employment equivalent to over half of the GDP and 80 per cent of employment, respectively.
“The 2021 IMF Article IV mission emphasised the need for monitoring risks and macro-financial impacts associated with a central bank digital currency. The IMF is ready to collaborate with the authorities on data analysis, cross-country studies, sharing the eNaira experience with other countries, and discussing further evolution of the eNaira including its design, regulatory framework, and other aspects,” it added.
