{"id":71352,"date":"2023-10-11T08:55:56","date_gmt":"2023-10-11T12:55:56","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/e-naira-not-a-threat-nigerias-central-bank-replies-to-critics-highlights-use-cases\/"},"modified":"2023-10-11T08:55:59","modified_gmt":"2023-10-11T12:55:59","slug":"e-naira-not-a-threat-nigerias-central-bank-replies-to-critics-highlights-use-cases","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=71352","title":{"rendered":"E-naira Not A Threat – Nigeria\u2019s Central Bank Replies to Critics, Highlights Use Cases"},"content":{"rendered":"
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The e-naira continues to generate controversy on its adoption rate, use cases, and more recently, claims by some observers on the threat it poses to the economy.<\/p>\n

The Central Bank of Nigeria (CBN) has publicly backed its digital currency the e-naira which it released to rival the growing popularity of private cryptocurrencies like Bitcoin (BTC).\u00a0<\/p>\n

In an Oct 9 press release<\/u>, the nation\u2019s top banking regulator stated that the Central Bank Digital Currency (CBDC<\/u>) is not a threat to financial stability urging all stakeholders to accept its use.<\/p>\n

On Oct 4, local news outlet Punch<\/u> reported on the dangers posed by the e-naira. It cited the CBN\u2019s report, \u201cEconomics of Digital Currency, ” which<\/i> warned about conversions from fiat to digital currency.\u00a0<\/p>\n

The report suggests that the economy may be impacted as funds converted to digital wallets become domiciled with the top bank without access to commercial banks for loans and other financial activities.<\/p>\n

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\u201cSince its inception, bank deposit conversion to e-naira has exhibited an average monthly growth of 78.3 percent and totaled about N1.66bn [$2.1 million]. Furthermore, eNaira in circulation as a ratio of average banking system liquidity has averaged 0.1 percent, reaching highs of 0.2 percent in each of May and August 2022.\u201d\u00a0<\/i><\/p>\n<\/blockquote>\n

CBN backs the e-naira\u00a0<\/h2>\n

In the bank\u2019s response, the stated in clear terms that its previous report does not indicate any harmful effect of the e-naira on the economy suggesting a lack of understanding of the report.<\/p>\n

The central bank also restated the threat posed by private cryptocurrencies<\/u> to the economy based on their use as speculative investments.<\/p>\n

\u201cA recurring theme in the book is the interest of regulators, such as the CBN, in the role of cryptocurrencies as speculative investments, and the potential threat they harbour for financial stability. Pursuant to that, the articles in the book provide an in-depth understanding of CBDCs generally and the workings of the eNaira in particular, highlighting issues and challenges in implementation and adoption\u201d<\/i><\/p>\n

Use cases to grow<\/h2>\n

Per the press release, the bank added that it will continue improving the e-naira in structure and user interfaces across multiple platforms.\u00a0<\/p>\n

Recently, several use cases have been announced for the e-naira<\/u> as it seeks to make payments easier for traders, farmers, and students.<\/p>\n

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On the economy, the digital currency has been hailed by financial experts for widening the tax net as it adds new demographics who were almost absent from the economy leveraging on the blockchain.<\/p>\n<\/p><\/div>\n