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Tuesday, May 17, 2022

Why CBN seeks to float digital currency ~ Mohammed

The Central Bank of Nigeria (CBN) said it aimed to launch digital currency before the end of 2021 in a bid to expand financial inclusion in the country.

The CBN Director of Information Technology,  Rakiya Mohammed said the regulatory bank target to expand financial inclusion in the country from the present level of 60 percent to 80 percent.

According to her, part of the steps needed to be taken to raise the percentage of the nation’s financial inclusion is the creation of digital currency.

Mohammed who spoke after the Banker’s Committee Meeting on Thursday said the proposed CBN digital currency would enhance the inclusion drive and reduce the cost of cash management while enabling innovations in the nation’s financial market.

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“Before the end of the year, the Central Bank will be making special announcements and possibly launching a pilot scheme in order to be able to provide this kind of currency to its populace,” she said.

“Officials of CBN have been exploring digital currency technology for over two years. There are two types of currency, notes and coins.

“The CBN digital currency will be a third type of currency. It will supplement the cash. Rather than carry cash about, you have the money in your phone.”

 “So the Central Bank currency is to be the third form of money which means just as we have electronic money, digital money is not new in Nigeria.

“Just as we are about the third or fifth in the whole world as far as advancement in the use of digital money is concerned.

“So this is going to compliment the coins and cash that we have.

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“The Central Bank digital currency will just be as good as you having cash in your pocket and even as you have the cash in your pocket, you are going to have the cash on your phone.”

“We all know how money has to travel for someone to send money from Nigeria to abroad and it is a huge money in Africa.

“We also know that recent report by EfiNA was that our target was to achieve 80 percent financial inclusion.

We are about 60 percent and at the rate at which we are going, we are not going to meet this target.

“Central Bank digital currency will accelerate our ability to meet this target,” Mohammed said.

The CBN had in February prohibits dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges in the country and directed banks and other financial institutions in the country to close the accounts used for operations.

“Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing with cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.,” the financial sector regulator stated in a circular.

The CBN said the use of cryptocurrencies “in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria.

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