Wed, Dec

IMF: CBN Needs To Manage Risks Associated With e-Naira

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The International Monetary Fund (IMF) said the Central Bank of Nigeria (CBN) should monitor operational risks associated with the recently launched digital currency, e-Naira. This was disclosed in a report by the IMF titled: 'Country Focus; Five Observations on Nigeria's Central Bank Digital Currency.'

The report stated that "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 your cyber security and operational risks associated with the eNaira."

The global body said that the launch of eNaira has drawn interest from the global world and the central banks of countries because of the size and complexity of Nigeria's economy.

The report also advised the CBN to mitigate potential risks associated with the use of the eNaira.

According to the report, "The authorities have taken measures to manage risks. The transfer of funds from bank deposits to eNaira wallets is subject to daily transactions and balance limits to mitigate the risks of diminishing the roles of banks and other financial institutions.

"Financial integrity risks, such as those arising from the potential use of the eNaira for money laundering, are mitigated by using a tiered identity verification system and applying more stringent controls to relatively less verified users."