CBN asks banks to strengthen operational capacity ahead of eNaira rollout

The Central Bank of Nigeria (CBN) has asked deposit money banks to strengthen their operational capacity to effectively harness the opportunities of its soon-to-be launched digital currency, eNaira.

Folashodun Shonubi, CBN deputy governor, operations directorate, said this at the Chartered Institute of Bankers of Nigeria (CIBN) Advocacy Dialogue Series 4, on Thursday in Lagos.

The event was themed, ‘Central Bank Digital Currencies: Insights for the 21st Century Banker’.

Last month, the apex bank announced that it had engaged Bitt Inc., a Barbados-based fintech firm, as its technical partner for the launch of eNaira.

According to NAN, Shonubi said nations were embracing the opportunities that the Central Bank Digital Currency (CBDC) presents for financial inclusion across the globe.

“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,” he said.

“Though Nigeria has blazed the trail in instant payments, we rank top when it comes to instant payments, the CBDC generally will improve efficiency and promote opportunities for jurisdictions without instant payment options to leapfrog on their operations of faster payment mode.

“We have so many countries today that have not implemented instant payments as we have done in Nigeria.

“More retail payments may assume real-time features, thereby requiring banks to strengthen their operational capacity to effectively harness the opportunity.”

The CBN deputy governor, who was represented by Musa Jimoh, the apex bank’s payments system management department director, said that the CBDC might enhance the liquidity of banks in developing nations, through international remittances.

He said that the diaspora population of developing nations was on the increase and remittances likewise, even as the world economy rebounds in the post-pandemic era.

According to him, the CBDC is expected to enhance efficiency in international remittances and challenge the current high cost of remittances.

He said that the expectation of the CBDC was to see how the cost of remittances could be brought down so that more people begin to remit money home.

“As remittance rule improves, the deposit base of the banks in receiving countries will also improve. That is one of the key benefits of CBDC,” Shonubi said.

“With greater inclusion, diversified bank deposit base, and expected growth in remittances, the economy will become buoyant as intermediation will be eventually deepened with broader access to finance.

”It is therefore hoped that outcome will be generally enhanced even as trade ramps-up with increased adoption of CBDC by more central banks.”

On his part, Lamido Yuguda, director-general, Securities and Exchange Commission (SEC), urged the CBN to properly position the eNaira to compete with other digital currencies in the world.

He explained that central banks across the world would adopt different models of digital currency.

“Over the next two to three years, you might actually see some models becoming more successful than other models,” Yuguda said.

“So, as we embark on this journey, we have to be very alert to what other countries are doing, because this is really competitive in the marketplace.

“People will want to position their currencies in such a way that really entices many other users even beyond their own borders to use this particular currency.”