CBN Adamant on Crypto as Digital Payments System Hits $2 Billion

Despite guidelines for the issuance exchange and custody of digital assets by the Securities and Exchange Commission (SEC) as well as the recent plan by the Nigerian Stock Exchange to start a blockchain-enabled exchange platform in the country, the Central Bank of Nigeria (CBN) has insisted that crypto assets still have no place in the Nigerian economy.

It is as it has been said that the value of the country’s digital payment system has grown significantly from $324 billion in 2008 to $2.4 trillion currently. This was revealed by CBN Deputy Governor, Economic Policy, Kingsley Obiora during a virtual event hosted by the International Monetary Fund (IMF) over the weekend.

Obiora had noted that cryptocurrencies lack the scalability to become means of payment in the country.

Last week, the Managing Director of the Nigerian Stock Exchange, Temi Popoola, said the exchange was considering deploying blockchain technology in the settlement of capital market transactions as part of efforts to deepen trade. and to attract young investors to the market.

The move follows the introduction of regulations to guide digital asset trading by the Nigerian Securities and Exchange Commission, and growing interest in the adoption of distributed ledger technology by businesses and policymakers. policies across the continent, including in Kenya and South Africa.

Obiora, while answering questions from IMF Africa Director Abebe Aemro Selassie, said: “I don’t think cryptocurrencies will achieve the scalability and eventually settlement to become the dominant mode of payment in this part of the world. .”

According to him, cryptocurrencies are quite volatile and could cause disruption in the financial sector. “What we have done in Nigeria is say these cryptocurrencies are issued by a decentralized authority, people we don’t know completely and what we have done is say we don’t want them not yet in our financial system.

“Indeed, the volatility they create can become a source of instability for the system. And as you can see, many central banks are taking this position as well.

“I think the word currency being added to cryptocurrencies is a misnomer. Because I don’t think as it stands cryptocurrencies actually have the stability they need to function as a monetary unit of accounting, a mode of payment a means of settling transactions

“In terms of settlement finality, I think that’s a problem because in the cryptocurrency world, every user has to agree before a transaction is settled, and that’s not how transactions need to be done, make payments to get your property back,” he stressed.

Meanwhile, speaking on the Nigerian payment system, Obiora said, “Nigeria is building one of the best payment systems in the world as we speak.

“Even in digital payments, we have seen the value of our digital payments grow from around $324 billion in 2008 to around $2.4 trillion now, so Nigerians are already very used to digital payments.

“As you know, even within the continent, one of the biggest FinTech companies flutterwave and many others or Opay, Paystack stack join us every year.”

He also added that the Central Bank of Nigeria (CBN) has announced plans to introduce an Unstructured Supplementary Service Data (USSD) code to improve the adoption of its eNaira.

He noted that the introduction of the USSD code is crucial to improve financial inclusion in the country and to ensure that people without smartphones can still transact on the eNaira platform.

“We have made serious progress over the past seven to eight years because when the current governor took over in 2014, one of the pillars of his vision was to significantly improve financial inclusion,” the deputy said. – governor of the apex bank.

“So at the time, we were 48% of our population in the financial system and given several policies that he designed and implemented, we’re almost at 70%. That still leaves us around 30% of our population out of the financial system and we believe the CBDC can help reduce that number even further.

“A lot of people might not have a smartphone, but this is basically the next step in our improvement in the CBDC, to introduce the USSD code so those who don’t have a smartphone can still transact. Once we are able to introduce the USSD code, you don’t need a smartphone to join the eNaira platform, you can still join easily once you enter your BVN,” he said. -he declares.

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Elaine R. Knight