IMF Cautions That Nigeria’s e-Naira Might be Used to Embezzle Funds

Despite earlier claims that the e-Naira, which was released by Nigeria’s apex bank, was very secure compared to BTC and other virtual currencies, a caution has been issued.

The IMF (International Monetary Fund) has issued an alert that this virtual Naira might offer opportunities for individuals and firms to launder money.

Advice From IMF To The Nation’s Central Bank

If the electronic currency should be used for payments across the nation’s borders, it could increase money fraud and funding criminal activities. This report is from the IMF consultation that was published earlier this month. Because of this, the monetary organization has advised the Central Bank Of Nigeria (CBN) to assess the likely risks that might occur. This assessment will be part of the apex bank’s current protocols to prevent financial terrorism and theft.

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The e-Naira employs a tiered user identification system, with each layer having serious transaction limits daily.

Users in the least category, including the cashless, are only allowed to spend $120 every day. Daily restrictions range from $487 to $2,428 in the top tiers, as reported by Reuters. Besides the issue of fraud, the IMF study also raised worries about Nigeria’s e-Naria’s cybersecurity.

Following the prohibition of banks from supporting crypto firms in the early part of 2021, the CBN created the electronic Naira in October. The central bank reported that about 500,000 users had acquired the virtual currency wallet a month after its release, with nearly 80,000 merchant members.

Since the rollout of the electronic currency, usage has dropped substantially, with just about N187 million ($450,000) recorded as transaction value three months after the launch. Reuters shows that China’s digital currency, e-yuan, had a daily transaction value of over $315,000 at the ongoing 2022 Winter Olympics in Beijing. China released its virtual currency on the 4th of January, 2022, and has been able to use the winter Olympics to increase the adoption of the electronic currency.

About The e-Naira

Nigeria released its electronic currency on the 25th of October, 2021, making the nation the first to do so on the continent. The currency is believed to be a welcome development that will revolutionize the economy of Nigeria. Users can download the mobile application linked to their bank account to access the electronic currency. Users without an account in a Nigerian Bank will have to face a daily restriction of N50,001 ($120) for each day. This is small compared to the N500,000 ($1200) for those with an account in a Nigerian bank.

The Nigerian electronic currency is an electronic equivalent of the paper currency, with the same valuation and authorized by the nation’s Central Bank. The e-Naira was not designed to replace paper cash but serve as an efficient and secure payment option.

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