eNaira, Nigeria’s Central Bank Digital Currency (CBDC) billed for launch next month, will not disrupt banks and FinTechs out of existence, Folashodun Shonubi, deputy governor, operations, Central Bank of Nigeria (CBN) said at the Chartered Institute of Bankers of Nigeria (CIBN) forum.
Rather, he said it would 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. CBDC is a digital representation of fiat currency of any nation. It is a virtual legal tender. Thus, CBDCs are legal tender as they are issued and regulated by competent monetary authorities of a country.
“I expect that in the coming days, we will see a globally rapid inclusion rate,” Shonubi, who was represented by Musa Jimoh, director, payment system management, said. This, he explained that the digital currency would further strengthen the banking system, especially as central banks globally have identified the need to ensure that banks are integral in the operations of CBDC.
On the risk of disintermediation, Shonubi believed this would be assuaged even as banks take their rightful place in the dynamics of operations of CBDC. “I am of the opinion that CBDC will strengthen the stability of the banking system even as deposits become more diversified when more people are banked”. Though Nigeria has blazed the trail in instant payments, he said the CBDC generally would improve efficiency and provide opportunities for jurisdictions without instant payments options to leap frog their implementation of faster payments.
More retail payments may assume real time features thereby requiring that banks strengthen their operational capacity to effectively harness the opportunities, he said. Welcoming the participants, Bayo Olugbemi, president/chairman of council, said the launch of the digital currency is an exciting development which is set to revolutionise the industry.
Across the globe, he noted that other central banks, including Bank of England, The People’s Bank of China and the Bank of Ghana are concluding plans to launch digital currencies within the year. According to him, the launch of such currencies is significant as it is capable of potentially reducing transaction costs and preventing the central bank from losing market share to cryptocurrencies which are still available via peer-to-peer trading platforms.
Read more at: https://businessday.ng/news/article/enaira-will-not-disrupt-banks-fintechs-out-of-existence-cbn/
