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HomeTop NewsCBN says eNaira 'll enhance banks liquidity, promote efficient diaspora remittances

CBN says eNaira ‘ll enhance banks liquidity, promote efficient diaspora remittances

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By Oludare Mayowa

The Central Bank of Nigeria (CBN) has said that the planned launch of e-Naira in the country would enhance banks liquidity and promote efficient diaspora remittances.

According to the CBN Deputy Governor, Operation, Folashodun Shonubi, the introduction of the Central Bank Digital Currencies (CBDC) will also  challenge the current high cost of diaspora remittances in the long run.

Shonubi, who spoke through the regulatory bank’s Director of Payment System, Musa Jimoh at a virtual Chartered Institute of Bankers of Nigeria (CIBN) Advocacy Dialogue, however, warned banks and the regulators on the need to “be wary of the risks and mitigate them adequately.”

He also assured Fintech firms that the launch of the digital currency will not disrupt their operations out of existence, but rather creater other opportunities for them “to develop value-added services.”

“For banks in developing nations, CBDC may enhance their liquidity through
international remittances. The diaspora population of developing nations are
on the increase and remittances likewise, even as the world economy rebounds in the post-pandemic era.

“The CBDC is expected to enhance efficiency in international remittances and challenge the current high cost of remittances. As remittances flow improves, the deposit base of the banks in receiving countries will also improve,” Shonubi said.

According to him, with greater inclusion, diversified bank deposit base and expected growth in remittances, the economy will become buoyant as intermediation will be eventually deepened with broader access to finance.

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He expressed optimism that output will be generally enhanced even as trade
ramps up with the increasing adoption of CBDC by more Central Banks.

He said; “it is my opinion that CBDCs will not disrupt out of existence the players in the banking and payments landscape i.e. banks, and other FinTechs.

“Rather it will provide them with another platform to innovate around the “new money” with opportunities to leverage the enabling infrastructure/platform to develop value-added services such as programmable smart contracts, micro credit, savings and payments etc,” the CBN deputy governor stated.

He said the introduction and implementation of CBDCs would support the integration with current payments options including cash in a flexible and
innovative manner.

He said eNaira will align with wider policy objectives and facilitation of monetary and financial stability while also promoting innovation and efficiency.

The CBN had promised to launch its version of digital currency on Oct 1, Nigeria’s independent day in response to the growing use of digital currency across the globe.

The regulatory bank last month announced the formal engagement of the global Fintech company, Bitt Inc., as the Technical Partner for its digital currency, named eNaira, which is due to be unveiled later in the year.

The bank said the selection of Bitt Inc, from among highly competitive bidders, was hinged on the company’s technological competence, efficiency, platform security, interoperability, and implementation experience.

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