- IMF managing director expresses concerns over the potential consequences of retail Central Bank Digital Currencies (CBDCs).
- Retail CBDCs could transform Nigeria’s financial systems with uncertain consequences.
- The IMF so far is collaborating with approximately 50 nations to ensure best practices in CBDC implementation amid growing interests.
Widespread use of Nigeria’s e-Naira could be problematic, according to IMF
In an interview given on May 1 at the Milken Institute's 2023 Global Conference, Georgieva emphasised her worry regarding retail CBDCs. The head of the IMF claims that the IMF believes retail CBDCs have far more leeway for error than wholesale CBDCs.
“We think that wholesale CBDCs can be put in place with fairly little space for undesirable surprises, whereas retail CBDCs completely transform the financial system in a way that we don’t quite know what consequences it could bring,” she said.
Retail CBDCs are state-backed virtual currencies that central banks issue for usage by individuals and companies, according to a Cointelegraph report, while wholesale CBDCs are similarly issued by central banks but are made to enable financial institutions to carry reserve deposits with a central bank.
In order to guarantee that best practices are implemented, the IMF MD stated that the agency was working with roughly 50 nations. She predicted that this collaboration will have a significant impact on banks and economies in the future.
The decision to produce a CBDC manual to assist central banks with CBDC design and implementation was made earlier by the IMF in response to the extraordinary levels of interest from countries all over the world.
Nigeria became one of the first nations in the world to create a central bank digital currency that is accessible to the general public on October 25, 2021, with the launch of the eNaira.
The Bahamas and the Central Bank of the Eastern Caribbean were also included on the coveted list by the most populous country in Africa.
Nigeria’s Central Bank governor, Godwin Emefiele, said on Tuesday that as of March 31, 2023, there were around 1.4 million e-Naira transactions.
The eNaira is a digital currency that is pegged to the naira and used as a store of value and a means of trade, according to the CBN.
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