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Tuesday, March 5, 2024

IMF advises CBN to foresee e-Naira risks

The International Monetary Fund encouraged Nigeria’s Central Bank to foresee the risk that the eNaira may represent to the country’s financial and economic stability. 

The IMF, on the other hand, praised the eNaira’s benefits for the Nigerian diaspora in the form of inexpensive transfer costs when transferring money from outside. 

“The eNaira is projected to cut remittance transfer costs, making it simpler for the Nigerian diaspora to remit monies to Nigeria by getting eNaira from international money transfer providers and sending them to beneficiaries in Nigeria via free wallet-to-wallet transfers,” the IMF stated.  

IMF has proposed a 50 million dollar trust fund for Nigeria…

“Nigeria is one of the most important remittance destinations in Sub-Saharan Africa, with remittance receipts totaling $24 billion in 2019.” 

“Remittances are often done through international money transfer companies (e.g., Western Union), with fees ranging from 1% to 5% of the transaction value.” 

“Like digital currencies elsewhere, the eNaira entails risks for monetary policy execution, cyber security, operational resilience, and financial integrity and stability,” the IMF stated.  

“For example, eNaira wallets may be regarded, or even operate effectively, as a deposit at the central bank, potentially reducing demand for deposits in commercial banks. There is a need to manage the eNaira’s cybersecurity and operational risks.” International Monetary Fund says.

“The IMF is willing to engage with the authorities on data analysis, cross-country research, sharing the e-Naira experience with other countries, and discussing further evolution of the eNaira, including its design, regulatory framework, and other features,” the statement stated.  

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