A Nigerian political economist and Presidential aspirant who served as former deputy governor of financial system stability at the Central Bank of Nigeria, Prof Kingsley Moghalu, has advised the CBN not to demonize cryptocurrencies as every payment service is affected by fraud.
According to Moghalu, “#Cryptocurrency Innovation is a fact of life. And, with Nigeria one of the top ten countries in cryptocurrency usage worldwide, we should engage, regulate and manage risks, not pretend it doesn’t exist and drive it underground where it becomes a shadow economy. Risky!”
The incumbent Central Bank governor, Godwin Emefiele, had posited that cryptocurrency fuels terrorism in Nigeria.
Moghalu however stated that “In the world today, there is about almost a trillion dollars worth of cryptocurrencies, so it’s a significant form of exchange especially in an age where innovation is becoming faster and faster online.
“So this is worth the big deal and many central banks have never been comfortable with cryptocurrencies, but some central banks despite their discomfort have begun to adapt to it because they recognise the inevitability of innovation. So they focus their minds now on how can we manage this thing, how can we make sure that it does not bring our financial system to ruin,” Professor Moghalu said on ARISE News.
“An that’s the issue with the central bank’s decision, it does appear in the eyes of many people although the central bank clearly has the authority to regulate the currency and financial space, but some people will say this looks a bit reactionary, why wouldn’t the central bank find a way to be ahead of the curve instead of behind the curve.
“I can understand their concerns there are concerns about criminality and fraud but every medium of exchange is subject to criminality and fraud. This is why when I was in the central bank as deputy governor I led the team that introduced the Bank Verification Number, the BVN, it was to act as a unique identifier to improve the security and efficiency of the payment system.
“The central bank too especially in our time, we did have a tendency for innovation ourselves, so I don’t see why there should be some sort of declaration of third world war between the central bank and cryptocurrency.”
Mr Moghalu called for some sort of deep thinking on the part of the Nigerian central bank on how to come up with a regulatory framework that restricts the use of cryptocurrency or subjects it to some sort of surveillance that alerts the central bank if there are serious abuses that can affect financial system stability.
“You have to be able to monitor to see whether there are signs of that coming on and you can stop trading and do other things, but an outright ban of financial institutions from having accounts associated with cryptocurrency exchanges or cryptocurrency trading seems to me wasn’t necessarily the best approach to the problem.
“There is another issue, that is the fact that we are in a depressed economy. A lot of Nigerians are making a living from trading in these cryptocurrencies, many of them young people.
“So there’s an impression created that people in Nigeria make progress, young people especially, they find avenues to be creative and innovative and make progress not because of the government but in spite of it and that’s a bit unfortunate in my view.”