Cryptocurrency Finance

Economists: How eNaira will affect banking sector

President Muhammadu Buhari, Monday, unveiled the Central Bank Digital Currency (CBDC) otherwise known as eNaira making Nigeria the first African country to introduce the new innovative form of the payment system.

Economists have said that the eNaira, when rolled out, will have far-reaching implications for the future of the banking sector in Nigeria.

The experts, in separate interviews, said whether the launch would be salutary or destabilising would depend on how it is implemented.

President Muhammadu Buhari on Monday, launched the Central Bank Digital Currency, the eNaira.

With the official launch, Nigeria becomes the first country in Africa and one of the first in the world to introduce a digital currency to its citizens.

Professor of Finance and Capital market, Nasarawa State University, Keffi, Uche Uwaleke, said without doubt that the launch would have effects on the future of the banking sector.

“Expectedly, being among first-time movers of a technologically complex project such as a central bank digital currency, it is bound to create winners and losers and produce unintended consequences.

“The cheering news, however, is that the CBN appears to have devoted considerable time and resources to prevent undesirable outcomes especially in relation to the health of the Nigerian banking sector.

“In any case, that the CBN is testing eNaira through pilot projects is a demonstration of a cautious approach. All said, the launch of the CBN’s digital currency is an important milestone which holds a lot of promise for the financial system in Nigeria and the banking sector in particular,’’ he said.

The Director, Centre for Economic Policy Analysis and Research, Prof. Ndubisi Nwokoma, said that the currency which is novel would be faced with distrust even as implementation progresses.

“The launch of the eNaira is a new path being taken by the CBN to follow in the global practice of enhancing the payment system through the use of digital currency.

“It is novel, even in advanced societies, hiccups may be encountered as implementation progresses. Even currently, many global companies have not fully embraced the use of crypto-currencies in payments.

“Skepticism may be the order of the day, at the onset, except for those already familiar with digital currencies,” he said.

A Professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, said the eNaira is a worthy innovation by the CBN, hoping that the banks would keep the charges low so as not to frustrate the project.

“eNaira is a worthy innovation by the CBN, though some other countries are already into it. It is expected to strengthen the cashless policy.

“It is an extension or addition to normal fund transfer except that it can be used easily for cross border transactions. It also requires an app that may not be available for those phones used by poor people.

“There is the need for more enlightenment on the modus operandi, even for educated people.

“One also hopes the banks with not frustrate the project through unholy charges. It’s a worthy financial innovation and problems that might arise can be resolved as soon as they rear their heads,’’ Tella said.

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