Nigeria’s eNaira, other CBDCs better than Bitcoin, altcoins – IMF – Blueprint Newspapers Limited
The International Monetary Fund has said Central Bank Digital currencies like the eNaira are a better bet than cryptocurrencies including Bitcoins and other altcoins.
It would be recalled that the CBN launched Africa’s first central bank digital currency (CBDC) in October last year.
According to the governor of the CBN, Godwin Emefiele, the adoption of a CBDC could improve economic activities and increase Nigerian GDP by $29bn over the next 10 years.
Nigeria is one of around 80 countries around the world that has been exploring the possibility, but will be the first to launch one in Africa. South Africa is moving towards a trial, while Ghana, Morocco, Tunisia, Kenya, and Madagascar are all reported to be in the research stages.
In a new statement, IMF Managing Director, Kristalina Georgieva says that CBDCs are gaining momentum after moving from theoretical to practical explorations.
Georgieva stated, “In order to become familiar with the bits and bytes of digital money, central banks are getting to work.
“We don’t yet know how far and how fast CBDCs will go, since they are still in their infancy. As a result, central banks are building up their ability to harness new technologies – so that they will be ready for whatever lies ahead.”There are about 100 or so countries that are exploring CBDCs with support from the IMF.“In contrast to private digital currencies, CBDCs can potentially offer greater resilience, more safety, greater availability, and lower costs when designed prudently.“Crypto assets, which are inherently volatile, are not backed by any government. It is possible that even the best-managed and regulated stable coins cannot compete with a well-designed and stable central bank digital currency,” she said.According to her, global central banks are committed to minimising the detrimental effects of CBDCs on financial intermediation and credit provision.
In order for the economy to function properly, this is imperative. The CBDCs we studied are not interest-bearing, which makes them useful, but not as attractive as traditional bank deposits as a vehicle for savings.In addition, the IMF has previously raised concerns about crypto assets threatening financial stability and consumer protection and eating into banking sector market share. As part of the institution’s global project, crypto regulations will also be swept and synchronised.
“The CBDCs we studied are not interest-bearing, which makes them useful, but not as attractive as traditional bank deposits as a vehicle for savings,” she added.
One of the advantages listed by the CBN in its Design Paper for the eNaira is that the eNaira will provide “a clear means for the government to send direct payments to citizens eligible for specific welfare programs more rapidly than through other means” without the need for an intermediary.
