TheCable

Kristalina Georgieva, managing director, International Monetary Fund (IMF), says a myriad of unforeseeable consequences could be brought about by retail central bank digital currencies (CBDCs).

Georgieva spoke in a recent interview at the Milken Institute’s 2023 Global Conference.

She said the IMF considers retail CBDCs to have far more room for error than wholesale CBDCs.

Retail CBDCs are digital currencies designed for public use while wholesale CBDCs are for use by certain regulated financial institutions.

The enaira, Nigeria’s digital currency, is a retail CBDC.

“We think that wholesale CBDCs can be put in place with fairly little space for undesirable surprises, whereas retail CBDCs completely transform the financial system in a way that we don’t quite know what consequences it could bring,” Georgieva said.

She said the IMF was collaborating with about 50 countries to ensure that best practices are adopted regarding CBDCs.

The Central Bank of Nigeria (CBN) has consistently encouraged Nigerians to embrace eNaira as an alternative to cash transactions.

Earlier in the week, Godwin Emefiele, CBN governor, said over 1.4 million transactions have passed through the eNaira plat­form from inception till date.

“The advent of the Corona Virus pandemic (COVID-19) no doubt triggered rapid advancements in financial technology leading to speedy digitisation of money and finance,” the CBN governor said.

“The CBN took advantage of the opportunity by launching the eNaira in October 2021. The eNaira was developed to broaden the payment possibilities of Nigerians, foster digital financial inclusion, with potential for fast-tracking intergovernmental and social transfers.

“Since its launch, the CBN has continued to modify its features to make it more accessible to a wide range of users.

“Today, one does not need a smartphone to use the eNaira as it has become compatible with all generations of mobile devices (old and new).

“Till date, over 1.4m transactions have passed through the eNaira platform.”