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IMF Says eNaira may reduce deposits in commercial banks

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IMF Says eNaira may reduce deposits in commercial banks

The International Monetary Fund has said the eNaira wallet may function as a deposit at the Central Bank of Nigeria and consequently reduce demand for deposits in commercial banks.

The comment came barely four weeks after President, Muhammadu Buhari, and top officials of the central bank launched the eNaira at the State House, Abuja.

As a result, the Washington-based fund on Tuesday warned the CBN to manage the various risks associated with the digital currency especially the threats it poses to monetary policy implementation, cyber security, among others.

The IMF disclosed this in its ‘Country Focus; Five Observations on Nigeria’s Central Bank Digital Currency.’

The global body said, “Like digital currencies elsewhere, the eNaira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability.

According to the IMF, the launch of the digital currency is drawing interest from the global world, and other central banks because of the size and complexity of Nigeria’s economy.

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The organisation added that the eNaira uses the same blockchain technology as Bitcoin or Ethereum, but is not a financial asset like the two.

The IMF noted that the e-Naira would increase financial inclusion, facilitate remission of remittances, and reduce informality.

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Finance

Transportation, Panacea For Realising AfCFTA Objectives – Amaechi

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Transportation, Panacea For Realising AfCFTA Objectives - Amaechi

Nigeria’s minister of transportation, Rotimi Amaechi, says that investment in transportation infrastructure is key to realising the major objectives of the African continental free trade area.

Amaechi, stated this at the international conference on the role of transportation in the implementation of AFCFTA, organised by the national institute of transport technology, NITT in Abuja, the nation’s capital.

According to him, transportation is essential for economic and social development as it provides vital links between centres of production and distribution.

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The minister noted that the sector was critical in implementing trade facilitation, enhancing regional integration and key to every other AFCFTA protocol.

While reiterating the commitment of president Muhammadu Buhari’s led administration towards providing an efficient transport system in the country, Amaechi said the government was embarking on huge transport infrastructure investment across the country.

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Finance

CBN Defends Naira with $2.1bn to Halt Further Depreciation

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CBN Defends Naira with $2.1bn to Halt Further Depreciation

In an effort to keep the Naira from crashing further the Central Bank of Nigeria (CBN) pumped $2.1 billion to the Investors and Exporters (I&E) window of the foreign exchange market in the first seven months of 2021.

The amount was an increased by 238 percent when compared with the $621.1 million injected to defend it in the same window in in the corresponding period of 2020 (7mths-2020). It also represented a 47 percent increase when compared with the $1.43 billion injected in the first 7 months of 2019.

According to CBN data, the highest amount injected this year was $474.65 million in April while the lowest amount of $195.91 million was recorded in June. While the intervention helped keep Naira hovering around N412 to 414, it came at a cost of depleting reserves that was replenished with debts.

It will be recalled that last month, Vice President Yemi Osinbajo called on the Central Bank of Nigeria to allow market forces control the exchange rate. Although CBN had adopted the flexible I & E window as its official exchange rate, it remained the single source of dollar supply thereby having a significant influence on how the market turns out daily.

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World Bank Says Nigeria’s Exchange Rate Strategy Discourages Investors, Increases Inflation

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World Bank Says Nigeria’s Exchange Rate Strategy Discourages Investors, Increases Inflation

The World Bank has stated that the Central Bank of Nigeria’s exchange rate management policies continue to discourage investment and fuel inflation.

This was disclosed by the World Bank in the November 2021 edition of its Nigeria Development Update tagged “Time for Business Unusual”.

The World Bank said the whole of Nigeria’s debt burden remains manageable for the time being, maintaining sustainable debt dynamics will require curbing the use of CBN financing for the deficit and addressing fiscal pressures to break the cycle of low growth and rising public debt.

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The primary macroeconomic challenges disturbing growth, according to the World Bank, are issues around the predictability and credibility of exchange-rate management, as well as an insufficient supply of foreign exchange (FX).

The report stated, “The government’s exchange rate management policies continue to discourage investment and fuel inflation. Exchange rate stability is a key CBN policy objective, and to preserve its external reserves the CBN continues to manage FX demand and limit the supply of FX to the market.”

The World Bank stated that the Nigerian central bank’s exchange rate cannot handle external shocks to the economy, as exchange-rate management emerges as one of the key drivers of inflation.

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World Bank to Finance Extra COVID-19 Jabs for Poorer Nations

 

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