Friday, October 16, 2020 / 8:50 AM / Ayomide Oguntoye for WebTV / Header Image Credit: 9to5MAC
As part of the rapid level of globalization now driven by digital technology, there have been increasing calls for the inclusion of the Central Bank Digital Currency in the financial market across the globe.
In a conference organized by the Global Policy House tagged "Central Bank Digital Currency Africa", there was a deep discussion about the concept of the CBDC.
The central bank digital currency (CBDC) is not a cryptocurrency, at least not in the true sense. CBDC is the digital form of fiat money. For instance, the Central Bank of Nigeria (CBN) decides to create a digital form of the naira.
A Central Bank Digital Currency is backed by a government's central bank, which means they hold the liability, not the commercial banks.
One major argument for a CBDC is that it would ensure that people have access to their legal tender if for any reason cash were not readily available.
Moreover, it aligns with the drive for a cashless economy which in the era of the COVID-19 pandemic has become widespread due to research that links cash handling to the spread of the virus.
Nigeria, however, has held off having any direct relationship with cryptocurrency. The CBN has in the past warned the banking public to stay away from digital assets.
Despite its warnings, Nigeria continues to make the top countries in the world carrying out peer-to-peer cryptocurrency transactions as well as occupying the top position in search of bitcoin across the world.
Analysts have said that the country is losing more from its stance against the cryptocurrency market.
During the conference, the convener and founder of the Global Policy House, Michelle Chivunga stated that it is important to explore the CBDC as it is one of the leading areas in the Digital economy as of today.
"I will argue that central bank digital currency is one of the most important trends for the future of money and payments over the next decade," Michelle Chivunga added.
Regardless of anyone's views of whether it is good or bad, the reality is that global interest in it is not going away.
The developments around digital currency are gaining traction, as the European Central Bank President Ms. Christine Lagarde said that it is being monitored closely as an option for adoption as a currency.
Apart from the ECB, the US Treasury Department, the G-7, G-20 and the International Monetary Fund are watching closely the evolution of the digital currency.