Central Bank of Nigeria pioneers a groundbreaking partnership, drawing from Ripple’s insights in their 2023 Digital Currency Report. This collaboration is set to provide a comprehensive understanding of digital currencies, benefiting both experts and the general public. Explore how this dynamic synergy is shaping the landscape of digital finance and the implications it holds for the financial world.
The Central Bank of Nigeria (CBN), the nation’s foremost regulatory body for financial institutions, has prominently incorporated insights from San Francisco-based blockchain payment firm, Ripple, in its latest report centered on digital currencies in 2023.
In their comprehensive 2023 report, titled “Economics of Digital Currencies,” the CBN repeatedly alludes to Ripple’s perspectives regarding central bank digital currencies (CBDCs). The report covers an array of facets related to CBDCs, encompassing their foundational principles and the impact they have on the stability of fiscal systems and financial inclusion.
Central Bank’s Mission: Illuminating CBDC Economics For Experts And The General Public
CBN’s primary objective with this report is to provide a lucid comprehension of CBDC economics for both experts and the general public. In this endeavor, CBN researchers have substantially drawn upon Ripple’s 2020 report on CBDCs.
The study underscores the proliferation of blockchain-based currencies, a trend that has spurred financial regulators worldwide to contemplate the implementation of CBDCs. This move is seen as a response to the potential challenges posed by privately issued digital currencies to financial systems.
Additionally, CBN has highlighted four global trends that have prompted central banks worldwide to explore the viability of introducing CBDCs. The first of these trends revolves around the sustained decline in the use of physical currency for conducting business transactions and payments. CBN supported this assertion by referencing a study indicating that global mobile wallet payments exceeded cash payments for the first time in 2021. The study also projected that cash would constitute just 13% of in-store transactions worldwide by 2024.
Furthermore, the CBN observed that central banks are contemplating digital currencies due to the growing expectation of issuing government-regulated tokens, a response to the increasing prominence of privately managed cryptocurrencies. In this context, CBN referred to Ripple’s report, which included a recent survey of over 1,600 financial professionals from 22 countries. This survey revealed that 85% of global payment industry leaders anticipate the introduction of digital tokens in their respective countries within the next four years.
Notably, Nigeria stands out as one of the few nations to introduce and fully implement a CBDC known as the “eNaira.” This milestone was accomplished in October 2021, with the apex bank aiming to expedite financial inclusion, stimulate more cost-effective and swifter remittances, enhance the effectiveness of monetary policies, and augment tax collection through the eNaira.