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CBN and global instability, vulnerability of cryptocurrencies

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When in February, the Central Bank of Nigeria (CBN) directed banks and other financial institutions to cease transactions in cryptocurrencies and facilitating payment for cryptocurrency exchanges, several stakeholders raised concern about the directive.

In the memo, dated February 5, the apex bank instructed banks and other financial institutions to identify individuals or entities that transact in cryptocurrency or operate cryptocurrency exchanges and close their accounts.

The memo was sequel to an earlier 2017 warning by the CBN that cryptocurrencies were not legal tender and that investors were unprotected. It explained that cryptocurrencies transaction was devoid of proper regulation and prone to financial crimes.

In spite of assurance by the CBN Governor, Mr Godwin Emefiele, that the directive was not inimical to the development of technology-driven payment system in Nigeria, many stakeholders still kicked against it.

They urged the apex bank to revisit the ban and see digital currencies as a tool for economic growth.

Emefiele had explained that the Nigerian payment system had evolved significantly over the past decade, boosted by reforms driven by the CBN, adding that cryptocurrency had no place in the Nigerian monetary system.

Sometime in May, the price of Bitcoin, which is the most popular cryptocurrency, fell drastically, after China imposed fresh restrictions. China had earlier banned banks and payment firms from providing services related to cryptocurrency transactions, and warned investors against speculative crypto trading.

Crypto-currency trading has been illegal in China since 2019 in order to curb money-laundering, but people were still able to trade in currencies such as Bitcoin online.

Mr Elon Musk, Chief Executive Officer, (CEO) of Tesla, an auto manufacturer, was also accused by stakeholders of contributing to the fall in value of cryptocurrencies.

After his electric car company invested 1.5 billion dollars in Bitcoin in February, and assuring consumers that he would accept Bitcoin as payment for Tesla cars, Musk reversed that decision, citing the environmental effects of mining new coins.

This further resulted in a fall in Bitcoin of more than 10 per cent. Meanwhile, other digital currencies such as Ether, which acts as the fuel for the Ethereum blockchain network, and Dogecoin also plummeted in value.

Early in the week, Bitcoin jumped past 30,000 dollars as Elon Musk said Tesla is “most likely” to start accepting it as payment again.

This instability in value, and vulnerability to policy decisions from both state and non-state actors further accentuated the high risk involved in cryptocurrency. It also vindicated the idea by CBN to suspend its transactions in the Nigerian banking system.

Many countries are yet to come up with effective and efficient means of regulating the cryptocurrency space conceived to be a money laundering den and a tool for terrorists.

Due to the anonymous mode of transactions of these currencies, the world’s biggest criminal groups seem to have made them convenient and global source for laundering money.

Meanwhile, the CBN has assured Nigerians that it would soon create its own, more secure digital currency.

Emefiele said this while addressing journalists after the last meeting of the Monetary Policy Committee (MPC) in May.

He said that the idea of a digital currency would soon become a reality in the country, and that the central bank had already set up a committee, which is working on the concept.

CBN’s Director, Information Technology Department, Mrs Rakiya Muhammed, at the end of the meeting explained that the Bank had been conducting research in regards to central bank digital currencies since 2017 and may conduct a proof of concept before the end of the year.

“Currently, there are two currencies, notes and coins. The CBN’s digital currency will be a third type of currency to supplement cash. Rather than carry cash about, digital currency lodges the money in a mobile phone,” she said.

Citing a recent report which indicated that Nigeria was at about 60 per cent in financial inclusion, she explained that the proposed CBN digital currency would enhance the inclusion drive, reduce the cost of cash management as well as enable innovations in the nation’s financial market.

The director noted that, with a target of 80 per cent at the end of the year, such a step needed to be taken to raise the percentage of the nation’s financial inclusion.

She added that a central governance structure would be set up to address all associated risks with a view to ensuring that the Nigerian public got the best technology for the digital currency.

Also, Director General of Securities and Exchange Commission (SEC), Lamido Yuguda, revealed that SEC was working with the CBN for a better understanding and regulation of cryptocurrencies in the country.

Analysts expressed confidence that a collaborative effort by the CBN and SEC would go a long way to deliver a safe digital currency platform in the country.

As the frailties and instability in cryptocurrency investment continue to manifest across the globe, and as more countries continue to take more stringent steps to restrict and regulate its transactions, stakeholders are commending the CBN for having the foresight to blaze the trail in identifying inherent dangers in cryptocurrency and restricting its transactions.

CBN’s move tallies with the thoughts of policymakers around the world, who have been considering the idea of central banks issuing their own digital currencies, called Central Bank Digital Currencies (CBDCs) and to be made available to everyone, rather than just to licensed commercial banks.

Analysts agree that a national digital currency managed on a single network could allow money to change hands almost instantly like in crypto transactions, but in a more secure business environment.
***If used, please credit the writer and the News Agency of Nigeria (NAN)

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Business & Economy

Kaduna refinery will begin production in December – NNPCL Boss, Kyari

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The Group Managing Director of the Nigerian National Petroleum Company Limited, NNPCL,Mele Kyari has disclosed that the refinery in Kaduna State will be ready for production by December 2024.

He disclosed this during a meeting with the Independent Petroleum Marketers Association of Nigeria and the Major Energy Marketers Association of Nigeria in Abuja.

He disclosed that operations at the Port Harcourt refinery are scheduled to begin in two weeks.

According to Kyari: “We did a mechanical completion of the (Port Harcourt) refinery, that was what we said in December. We now have crude oil already stocked in the refinery. We are doing regulatory compliance tests that must happen in every refinery before you start it, and I assure you that this Port Harcourt refinery will start in the next two weeks.

“Completing the mechanical work means that you are done with the rehabilitation work, now you have to test to see how it works. Of course, we have also completed the mechanical work on the Warri refinery.

“It is also undergoing regulatory compliance; processes that we are doing with our regulator, and this will soon be completed and it will be ready.

“The Kaduna refinery will be ready by December. We have not reached that stage in Kaduna, but we promise Kaduna will be delivered by December.”

 

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Business & Economy

Edun Blames Economic Hardship On Free Printing Of Naira During Buhari’s Govt

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Minister of Finance, Wale Edun, stated this on Wednesday when he appeared before the Senate Committee on Finance chaired by Senator Sani Musa.

The Federal Government has disclosed that the free printing of naira notes for eight years, under the previous administration went into the hands of a privileged few, without corresponding productivity, resulting in the country’s current economic situation.

Minister of Finance, Wale Edun, stated this on Wednesday when he appeared before the Senate Committee on Finance chaired by Senator Sani Musa.

While elaborating on measures to revamp the economy, the Finance minister vowed to thoroughly audit the 22.7 trillion naira, and mop up the monies from the market and use it to pay the central bank to give the government a balanced book.

Responding to questions, the finance minister addressed the issue of waivers on customs duty running into trillions of naira, promising to overhaul the system, rejig it and implement a technology and payment system that would correct all anomalies in place.

He further disclosed that a total of 13 trillion naira was collected as non-oil revenue in 2023.

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Harsh Economy: FG To Begin Distribution Of Grains Nationwide 

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The Federal Government will begin the distribution of grains nationwide to cushion the impacts of the hardship in Nigeria.

Minister of Agriculture and Food Security Senator Abubakar Kyari disclosed this on Monday.

“Dear Fellow Nigerians,” he wrote on his official X handle. “In these trying times, I extend my sincere compassion to those affected by the hardships in the country. I understand the gravity of the situation, especially with the unfortunate event of foodstuff warehouse looting.

“Amidst these challenges, I want to assure you that our commitment to your well-being remains resolute. We shall commence the distribution of 42,000 metric tons of grains, as approved by Mr. President, across the 36 states of the federation as one of the programs to be rolled out this week.

“We are working hand in hand with NEMA and the DSS to ensure that the grains get to the right people in the right packages and quantities. Furthermore, 58,500 metric tons of milled rice from mega rice millers will also be released into the market for stabilization.”

The minister who hailed the resilience of the Nigerian people, urged them to back President Bola Tinubu’s government in its quest to address the challenges facing the country.

“I acknowledge the strength of the Nigerian people, and it is this resilience that will guide us through these difficult times. Let us stand together to support Mr. President in his strive for a better Nigeria,” Kyari said.

“Our government under the leadership of President Bola Ahmed Tinubu is committed to addressing these challenges and working towards a more secure and prosperous future for all.”

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