The International Monetary Fund, IMF says it is ready to work with Nigeria to improve its CBDC, the e-Naira.
Since going live in October 2021, close to 500,000 people have downloaded the e-Naira wallet, and nearly $150,000 worth of transactions has been carried out via the wallet.
The IMF’s Monetary and Capital Markets Department has been involved in the e-Naira rollout process, including by providing reviews of the product design.
However, the IMF has pointed out some of the risks that the pioneering CBDC has to carefully navigate.
- Monetary policy implementation
- Cyber security
- Operational resilience
- Financial integrity and stability
The institution has pointed out that e-Naira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks.
IMF notes that Nigeria has applied measures to mitigate the risks as follows:
- The transfer of funds from bank deposits to e-Naira wallets is subject to daily transactions and balance limits to mitigate risks of diminishing the roles of banks and other financial institutions
- To prevent illicit activity such as money laundering, the e-Naira has implemented a tiered-identity verification system and applied more stringent controls to relatively less verified users.
For example, for now only people with a bank verification number can open a wallet, but over time, coverage will be expanded to people with registered SIM cards and to those with mobile phones but no ID numbers.
Under the verification system, low-tier categories of holders have tighter transactions and limits even though even the highest tier holders can not hold more than 5 million naira ($12, 200).
The IMF is ready to collaborate with Nigeria on:
- Data analysis
- Cross-country studies
- Sharing the e-Naira experience with other countries
- Discussing further evolution of the e-Naira including its design, regulatory framework, and other aspects