E-naira Not A Threat - Nigeria’s Central Bank Replies to Critics, Highlights Use Cases
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.
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).
In an Oct 9 press release, the nation’s top banking regulator stated that the Central Bank Digital Currency (CBDC) is not a threat to financial stability urging all stakeholders to accept its use.
On Oct 4, local news outlet Punch reported on the dangers posed by the e-naira. It cited the CBN’s report, “Economics of Digital Currency, " which warned about conversions from fiat to digital currency.
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.
“Since 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.”
In the bank’s 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.
The central bank also restated the threat posed by private cryptocurrencies to the economy based on their use as speculative investments.
“A recurring theme in the book is the interest of regulators, such as the CBN, in the role of cryptocurrencies as speculative investments, and the
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