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eNaira, Others May Drop Remitting Cost To Nigeria, Others —IMF

eNaira, Others May Drop Remitting Cost To Nigeria, Others —IMF

eNaira, Others May Drop Remitting Cost To Nigeria, Others —IMF

eNaira, Others May Drop Remitting Cost To Nigeria, Others —IMF

The cost of sending and receiving the money to Nigeria and other Sub-Saharan African nations may decrease because of the central bank’s digital currencies, according to the International Monetary Fund.

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Sub-Saharan Africa is the most expensive place to send and receive money, according to the Washington-based lender, with an average cost estimated at just under 8% of the transfer amount. CBDCs might make the procedure more affordable by shortening payment chains and fostering competition among service providers.

 In its ‘More African Central Banks Are Exploring Digital Currencies,’ report published on its blog, the IMF said, “They can also facilitate cross-border transfers and payments.

“Sub-Saharan Africa is the most expensive region to send and receive money, with an average cost of just under eight per cent of the transfer amount. CBDCs could make sending remittances easier, faster, and cheaper by shortening payment chains and creating more competition among service providers.

“Faster clearance of cross-border payments would help boost trade within the region and with the rest of the world.”

eNaira, Others May Drop Remitting Cost To Nigeria, Others —IMF

Following Nigeria’s launch of the eNaira in October, the fund organization reports that other central banks in sub-Saharan Africa are investigating or testing out digital currencies. CBDCs are safer and less unstable than crypto assets,

It stated that the Bank of Ghana was testing the e-Cedis while the South African Reserve Bank is experimenting with a wholesale CBDC as part of the second phase of its project Khokha and participating in a cross-border pilot with the central banks of Australia, Malaysia, and Singapore.

It said while countries have different motives for issuing CBDCs, it has some potential important benefits for the region.

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The IMF further said, “The first is promoting financial inclusion. CBDCs could bring financial services to people who previously didn’t have bank accounts, especially if designed for offline use.

“In remote areas without internet access, digital transactions can be made at little or no cost using simple feature phones. CBDCs can be used to distribute targeted welfare payments, especially during sudden crises such as a pandemic or natural disaster.

eNaira, Others May Drop Remitting Cost To Nigeria, Others —IMF

 Several risks and challenges need to be considered before issuing a CBDC. Governments must improve access to digital infrastructures such as a phone or internet connectivity.

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 “There is a risk that citizens pull too much money out of banks to purchase CBDCs. Affecting banks’ ability to lend. This is especially a problem for countries with unstable financial systems.

“Central banks will also need to consider how CBDCs affect the private industry for digital payment services, which has made important strides in promoting financial inclusion through mobile money.”


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