eNaira may Reduce Nigerian Banks Deposits – IMF Report


Alt: = "eNaira and IMF logos"

Report by the International Monetary Fund (IMF) predicts that Nigerian deposit banks are likely to lose bank deposit to eNaira wallets. 

The report which was  released on Tuesday, says the introduction of eNaira poses risk to commercial bank deposits.

Jack Ree, an economist with IMF, highlighted the potential risks that could spring in the cause of making transactions with the recently launched digital currency, and the need to manage such risks.

He explained that the currency’s heavy reliance on digital technology warrants the need to adequately manage cybersecurity and operational risks associated with the digital currency.

 “…eNaira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks,” he said. “Relying as it does on digital technology, there is a need to manage cybersecurity and operational risks associated with the eNaira.”

Business Compiler had earlier in an article on the disadvantages of eNaira, expressed concern on the cybersecurity risk and the digital currency would depends heavily on technology.

However, Mr Ree in the IMF report explained that the eNaira wallets might effectively function, as a deposit at the central bank, resulting in a decline in the demand for deposits in commercial banks.

He highlighted monetary policy implementation, cyber security, operational resilience, and financial integrity and stability as other concerns that could spring up in the cause of transacting with the digital currency.

However, Biodu Adedipe, renowned financial expert has  argued that the newly-launched eNaira would not affect deposits of commercial banks.

Mr Adedipe said e-Naira could not replace deposits or reduce the ability of the banks to create credits. According to him, banks will not lose their deposits to digital naira because of limits on e-Naira wallet transactions.

The eNaira was launched on October 25, by President Muhammadu Buhari. Since then, 33 deposit money banks have joined the platform, N500 million been minted and over 500,000 download of the wallet app.

Post a Comment

Previous Post Next Post