CBN to introduce new laws against financial system threats

Joy Onuorah
Joy Onuorah
Godwin Emefiele

The governor of the Central Bank of Nigeria, Godwin Emefiele, has stated that the apex bank will create a set of new and revised laws, rules, and regulations to tackle threats against the financial service system.

These development, he said, would address potential violations, change the incentives for the private sector, and restructure the market to foster competitive edge and encourage new entrants.

Emefiele, who made this statement in Abuja at the 28th edition of the yearly internal executive seminar on “Digitalization of Money and Monetary Policy in Nigeria,” noted that the central bank is aware of the possibility that new types of innovative financial products or services could render some current banking laws and regulations redundant and potentially harm revenue growth.

He acknowledged that as digital technology became more widespread, new types of hazards, such as sophisticated cybercrime and digital fraud, emerged. He cited the use of digital identity, anti-money laundering standards, domestic and international safety and security measures, and cyber security as measures taken to increase operational resilience and guarantee the security of the financial system.

Emefiele made the following statement while being represented by Aisha Ahmed, the deputy governor in charge of financial system stability.

Emefiele said that in the current digital revolution, central banks are not only concerned with creating an environment that will allow for the adoption of digital technology in the financial system, but they are also at the forefront of cutting-edge innovative products and services to provide safe and open payments for a digital economy.

The low level of formal financial services, low income, financial illiteracy, an underdeveloped technological ecosystem, and a fragile infrastructure, he recognized, have continued to restrict the possibilities for the integration of digital financial services in Nigeria.

He emphasized that although significant progress has been made in increasing financial inclusion in Nigeria, the inclusion rate, which is currently 64.0%, delays the process of digital transformation because all individuals must be included in order to fully benefit from a digital economy.

Emefiele continued: “Also, despite the significant progress recorded in the use and spread of digital payment infrastructure, particularly in the economic cities, the current financial inclusion rate suggests that more work is needed. The high cost of telecommunications infrastructure, including Internet and electricity, in remote, urban and low economic activity areas, continue to dissuade investments in such areas, where low income and financial illiteracy are already inhibiting social and economic advancement.

“As such, there is ample room for deepening the financial system through broader coverage.”

The deputy governor for economic policy at the Central Bank of Nigeria, Dr. Kingsley Obiora, made a hint during his remarks at the event that the amount of the eNaira now in circulation is at N2.10 billion, an increase of 190.1% from its level when it was first introduced.

The construction of both individual and merchant wallets has gained traction and is positioned to further drive eNaira transactions in Nigeria, according to him, which supports the growth.

Dr. Obiora highlighted that while roughly 17 million persons do not now use electronic payments but do own phones and are curious about mobile money, another 22 million adults do not currently use electronic payments but claim they might be persuaded to do so.

“This reflects the extent to which the eNaira could impact the unbanked and under-banked to improve livelihoods, as well as economic growth and development in Nigeria,” Obiora added.

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