Saying that a central bank digital currency (CBDC) is safer than cryptocurrencies, the International Monetary Fund (IMF) has warned Nigeria, which has launched its own CBDC, eNaira.
Recognizing the potential benefits of eNaira in October 2021, when it was introduced, the IMF says that now the Central Bank of Nigeria (CBN) using eNaira for cross-border transfers carries some risks.
The IMF said in its report released this month that the use of eNaira for international payments carries risks of money laundering, financing terrorism and cybersecurity.
The following statements were included in the report:
“The possible expansion of eNaira usage towards cross-border fund transfers and bank networks could result in financing new money laundering and terrorism risks. “
The IMF said that the Nigerian central bank should take the necessary measures regarding the risks it foresees.
“While there are preventive measures and AML/CFT regulations for eNaira agents, a money laundering/terrorist financing risk assessment and regulation regarding domestic and cross-border uses of eNaira needs to be adopted and implemented. These measures should be the priority of the central bank.”
Although Nigeria is one of the countries with one of the highest cryptocurrency adoption rates in the world, the use of cryptocurrencies was banned in the country last February on the grounds of money laundering and terrorism.
With the aim of improving the payment system in the country after the bans, in October 2021 Nigeria became the first African country to launch its own digital currency, eNaira.