Adedapo Adesanya
By Adedapo Adesanya
Financial Derivatives Company (FDC) Limited has lauded the proposed plan by the Central Bank of Nigeria (CBN) to introduce a digital currency, saying it will deepen financial inclusion in the country.
In a new report, FDC explained that most central banks had indicated keen interests in developing their digital currencies in response to the threats and limitations of cryptocurrency, including poor regulation, price volatility and facilitating illicit financial transactions.
The report said, “Nigeria is set to follow the global trend as it plans to launch its digital currency by year-end. Unlike crypto, digital currencies are regulated by central banks, thus giving them some level of control over the financial system.
“On a positive note, virtual currencies would facilitate smooth financial transactions and eliminate bottlenecks associated with the use of cash (mutilated notes, forgery, cash handling charges, shortages). It will also deepen financial inclusion and increase the velocity of circulation.”
The analysis highlighted the rising concerns of distrust in the government and its policies, cybersecurity and inadequate digital infrastructure.
“All these could limit the launch and widespread use of the digital currency in the country,” it said.
According to the report, the drop in inflation rate in May for the second straight month contradicts market reality following the report by the National Bureau of Statistics (NBS) which disclosed that the country’s inflation rate fell to 17.93 per cent in May from 18.12 per cent in April.
FDC said contrary to analyst expectations, the decline in consumer price inflation seemed to be more of a trend than a blip.
It said the headline inflation fell again in May primarily due to a fall in the food sub-index to 22.28 per cent from 22.72 per cent in April.
This is coming as the CBN last year issued a circular asking commercial banks and other financial institutions to close accounts transacting in, or operating on, cryptocurrency exchanges.
All deals involving cryptocurrency are now prohibited with severe regulatory sanctions awaiting erring outfits.
The apex bank also asked commercial banks to identify persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.
But since the apex bank announced its intention to introduce a digital currency for the country, it has been applauded.
Apart from the FDC, other analysts have submitted that the proposed CBN’s digital currency would benefit the nation, especially as the digital asset is becoming widely accepted across the globe.
