Update: CBN To Launch Digital Currency Following Osinbajo’s Suggestion

The Central Bank of Nigeria has said it will launch its digital currency following an advice by the Vice President Yemi Osinbajo that cryptocurrency should be regulated not banned.

The decision to launch its digital currency was reached during a private webinar on Thursday in which the CBN said about 80 per cent of central banks worldwide are exploring issuing digital currencies.

Rakiya Mohammed, CBN director of information technology, explained that the central bank began conducting research in 2017 with regards to developing a digital currency.

It would be recalled that Prof Osinbajo had on February 26 spoke on the controversial issue that blockchain technology was generating at the time. He had urged the CBN to regulate and not prohibit cryptocurrency.

On the very topical issue of blockchain technology, digital assets, and cryptocurrencies let me say two things.

“First is that there is no question that blockchain technology generally and cryptocurrencies, in particular, will in the coming years challenge traditional banking, including reserve banking, in ways that we cannot yet imagine so we need to be prepared for that seismic shift and it may come sooner than later,” he said at the Bankers Committee Vanguard.

CBN considers introduction of digital currency

“Already, remittance systems are being challenged. Blockchain technology will provide far cheaper options for the kind of fees being paid today for cross-border transfers,” he said.

Osinbajo noted that, “I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple, which is based on the blockchain distributed ledger technology with its own crypto tokens. There are, of course, a whole range of digital assets spawned daily from blockchain technology.

“I fully appreciate the strong position of the CBN, SEC, and some of the anti-corruption agencies on the possible abuses of cryptocurrencies and their other well-articulated concerns, but I believe that their position should be the subject of further reflection.

“There is a role for regulation here. And it is in the place of both our monetary authorities and SEC to provide a robust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs. So it should be thoughtful and knowledge-based regulation not prohibition. The point I am making is that some of the exciting developments we see call for prudence and care in adopting them, but we must act with knowledge and not fear,” he said.