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Monday, November 29, 2021

Analysts hail CBN over e-Naira

Francis Akinnodi

The Central Bank of Nigeria’s (CBN) digital currency dubbed “e-Naira” has sparked hot debates since the apex bank sent a presentation on its use case to Nigerian banks.
The Hope spoke to several analysts to get a feel of the expectations and reservations of Nigeria’s finance juggernauts on the e-Naira which would be formally unveil by President Muhammadu Buhari on Monday 25 October 2021, at the State House, Abuja.
An economist, Dr Timothy Awe said, “I think the e-Naira is a good initiative in the sense that in the next couple of years, the global economy should be moving to digital currencies.
“We’ve heard announcements by various countries on plans to start their digital currency, so we can say that the CBN is moving in the right direction.”
However, he did not think the introduction of a digital currency would strengthen the value of the Naira.
“The eNaira is just a digital representation of the Naira itself, so it doesn’t strengthen the value of our currency.
“If I say 5 e-Naira is N5,000 today, what would make 1 e-Naira be N5,000 tomorrow would be the attractiveness of our currency and what we produce (existing factors). The existing factors (demand and supply) plus production levels will continue to be the major factors driving the value of the Naira,” he opined.
A financial consultant, Joseph Adewumi described the move by the apex bank as a formidable step as the nation navigates into the 4th industrial revolution.
“I think it’s a good step forward to advance the bank population further and also encourage the financial inclusion ideology of the populace. We are entering into the next evolution and that’s the digital evolution and to be forward-thinking at this point in time is critical.
He postulated that the e-Naira would aid international trade and strengthen the Naira, but backward integration is still needed.
According to Director, Information and Technology, CBN, Rakitya Muhammed, the introduction of the e-naira can catalyse Nigeria’s digital economy, boost cross border trade and enable better macroeconomic policy formulation.
She said, “If people adopt more of the usage of the e-naira, then we will be able to have more data to formulate better macroeconomic policies.
“And when countries come on board and create their own digital currencies then we will be able to have faster exchange of currencies and therefore we might be able to boost cross border trade at a much lower cost.
“We believe that the e-naira would be a catalyst for digital economy because the people who are outside the formal banking sector will be integrated.”
Dr Ifeoluwa Ogunrinola opined that the e-Naira is a welcome development that fits current global trends as other countries are also delving into the crypto alternative.
He also raised concerns about the volatility of the Naira, saying, “CBN announced that the e-Naira would be pegged to the fiat currency, and so would function as a stablecoin. However, it is feared that the e-naira may inherit our paper currency’s volatile nature.

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