News

IMF Gives eNaira Thumbs Up In First Year Report

Key Points:

  • Nigeria’s eNaira CBDC has been assessed by the IMF in a working paper.
  • The eNaira’s retail side was intermediated and had no problems with latency.
  • The eNaira has yet to make a breakthrough beyond its initial adopters and only about 1.5% of wallets are active on any given week.
Nigeria’s eNaira central bank digital currency (CBDC) has now been in operation for over a year, and the International Monetary Fund (IMF) has recently released a working paper assessing its first year of performance.

The IMF researchers have commended the eNaira’s debut year, stating that it has been “laudable”. However, the paper also has a few suggestions on how to further improve its performance.

It is worth noting that the eNaira was the world’s second CBDC, having launched in October 2021 after the Bahamian Sand Dollar. According to the paper, the eNaira’s retail side was intermediated, but it has yet to make its breakthrough beyond its initial adopters. The Central Bank of Nigeria introduced a phased introduction, which unfortunately has put off two of the CBDC’s biggest goals – extending financial inclusion to the unbanked and facilitating remittances – according to IMF officials.

The current usage of the eNaira is relatively low, with only about 1.5% of wallets being active on any given week. Additionally, there were only a total of 802,000 transactions during the timespan examined, which represents less than one per wallet. Furthermore, less than 1% of bank accounts in Nigeria have wallets. The paper has observed that breaking the initial low adoption equilibrium for any network products with similar traits, such as credit cards, requires a mix of clever strategies and luck.

The relationship between the eNaira and mobile money operators (MMOs) in Nigeria is a key question raised in the paper. The CBDC could either compete with the MMOs on the retail market or facilitate MMOs’ operations by providing a bridge between them. The paper has called the eNaira’s replacement of all the MMOs’ services “hard to imagine,” but also noted that a bridge function could set off a difficult “industry reshuffle.”

As a single-currency system, the IMF has mentioned that the eNaira is unable to accommodate remittances directly. However, this could be overcome either by allowing international money transfer operators to receive eNaira wallets or through intermediation. The researchers have recommended the former, though both options will remain expensive, which the IMF considers a serious problem in light of the parallel, underground market that serves the same purpose.

The paper has recommended a few steps for boosting eNaira usage. For instance, the eNaira could be used for social payments in conjunction with MMOs that improve the social cash transfer system and increase adoption. Merchants could also be incentivised to use the eNaira. The Central Bank of Nigeria has already started to work on inclusivity through the eNaira, according to the paper. However, remittances remain problematic, and resolving this issue is crucial for achieving the eNaira’s full potential.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Annie

Coincu News

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.

Recent Posts

Bitcoin, Ethereum, And Solana Lead Crypto Market, But Not For Long With New AI Altcoin With 30,000% Potential, Expert Says

Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) dominate the crypto market, but experts warn that…

30 mins ago

Dogecoin Price Prediction: Will DOGE Ever Hit $0.7 Again? Why ETFSwap (ETFS) Is The Best Alternative For 100x Gains

Discover the future as the Dogecoin price aims for a $0.7 comeback and discover why…

4 hours ago

Step into BlockDAG’s Presale Frenzy This November: Secure a Massive 100% Bonus with BDAG100!

November is the perfect time for BlockDAG's huge presale. Use BDAG100 to double your purchase.…

6 hours ago

OpenSea New Version Will Be Launched In December

OpenSea new version is scheduled to launch in December, with an improved user experience, improved…

6 hours ago

This website uses cookies.