Analysts at Financial Derivatives Company Limited, headed by Bismarck Rewane, have stated that the proposed digital currency will deepen Nigeria’s financial inclusion.
According to these analysts, most central banks are keenly interested in creating their digital currencies to address the threats and shortcomings of cryptocurrency which include; absence of regulation, price volatility and facilitating illicit financial transactions.
FDC, in its recent report, stated that “Nigeria is set to follow the global trend as it plans to launch its digital currency by year-end. Unlike crypto, digital currencies are regulated by central banks, thus giving them some level of control on the financial system.
“On a positive note, virtual currencies would facilitate smooth financial transactions and eliminate bottlenecks associated with the use of cash (mutilated notes, forgery, cash handling charges, shortages). It will also deepen financial inclusion and increase the velocity of circulation.”
The analysts, however, highlighted rising concerns of distrust in the government and its policies, cyber security and inadequate digital infrastructure.
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“All these could limit the launch and widespread use of the digital currency in the country,” it said.
According to the report, the decline in inflation rate in May for the second consecutive month is in contradiction of market reality.
FDC said contrary to analyst expectations, the decline in consumer price inflation seemed to be more of a trend than a blip.
It said the headline inflation fell again in May primarily due to a fall in the food sub-index to 22.28 percent from 22.72 percent in April.
