The Central Bank of Nigeria (CBN) and more than 60 percent of other central banks in the world are under pressure to issue sovereign digital currency following the sudden rise in value and acceptability of cryptocurrencies.
This is coupled with the search by investors for alternative places to put their money.
An economist and Chief Executive Officer, Global Analytics, Tope Fasua, who disclosed this on Tuesday at the February edition of the Finance Correspondents Association of Nigeria (FICAN) monthly forum in Lagos, said though no banker to the government will support cryptocurrency, they have no option than to begin to issue their own Central Bank Digital Currency (CBDCs).
According to him, about five countries namely China, Ecuador, Senegal, Tunisia, and Singapore have issued digital currencies, not cryptocurrency, and bankers know that they are done if cryptocurrencies really take off and replace traditional currencies.
Specifically, he said quite a number of bankers have invested in cryptos just to hedge their bet. But the traditional financial system is deeply rooted, organised and backed by the government, unlike the cryptocurrency mining space.
This is coming at a time when Godwin Emefiele, the governor of the Central Bank of Nigeria (CBN), honoured the invitation of the Senate over the ban placed on cryptocurrency-related accounts in the country.
Emefiele arrived at the National Assembly on Tuesday to honour the request by the Senate Joint Committee on Banking Insurance and Other Financial Institutions.
However, speaking on the topic, ‘Ban on Cryptocurrency-Related Accounts in Nigeria and Concerns of Global Central Banking’, Fasua stated that the proponents of cryptocurrency believe that there is a need to push back and do something different, that will mimic the attributes of a gold-backed currency in view of durability and scarcity, but better than the current system by being smart, secure and not possible for central banks to issue at will.
“If it started as a rebellion (which is the case), then you must think of the incentive for the global economy to sign on to that rebellion with you against the devil they know. This then means that until there is global acceptance of the currencies, it will continue to be easy to create panic in the crypto world and big players can dump the currency when they have achieved gains.
“It then becomes worse than the stock market because for cryptocurrencies the fundamentals are non-existent apart from an analysis of how many are adopting the currency and who is winning between an established traditional banking system and the new kids on the block.”
According to him, cryptocurrency is heading to global single currency but one major challenge is that there are a lot of losses in it and that when most coiners die, no one is able to access their investments which are encrypted with passwords, passphrases and whatnot.
“People don’t usually plan to die. Now, this is where regulation helps in the financial markets. Apart from deposit insurance, which kicks in, in the event of the collapse of an insured and regulated financial institution, the relations of a dead account holder in a traditional bank could still have access to their balances,” Fasua stated.
Also speaking on the ‘Imperatives of SMEs as Alternative Source of Income Post COVID-19,’ an entrepreneur and the Creative Director (CD), Eleven Squared Enterprise, Libby Ofem-Oke, said though the pandemic has brought a lot of challenges, many people are still taking advantage of COVID-19 to cash out.
According to her, in this period of new normal, Small and Medium Scale Enterprises operators should leverage social media because it not only opens the door to new markets, a lot of opportunities exist therein.
Ofem-Oke added that though there are challenges in the Nigerian operating environment, entrepreneurs should always see them as stepping stones and remain focused, stressing that in order to be relevant, SMEs should keep rebranding no matter the cost.
“The system is frustrating but the key is, don’t give up,” Ofem-Oke emphasised.