IMF Representative in Nigeria Calls for Caution in Using Cryptocurrencies – Economics Bitcoin News

Ari Aisen, the Nigeria-based representative of the International Monetary Fund (IMF) recently discussed the Central Bank of Nigeria (CBN) policy targeting crypto companies. In a special virtual press conference, Aisen reiterated some of the CBN’s claims that cryptocurrencies are used “for illegal transactions such as money laundering and drug trafficking”.

CBN act in the interests of the stability of the financial sector

According to a report, Aisen, who says other central banks have taken similar measures, believes that “some caution should be exercised” when using cryptocurrencies. In an obvious justification for the directive, Aisen suggests that the CBN only wants a solution that is “in the interests of the payment system and the sustainability of the financial sector”.

During the same briefing, however, Aisen also called on the Nigerian monetary authorities to examine the “unification of exchange rates”. While the CBN keeps the exchange of the naira against the US dollar at 380: 1. The parallel market, on the other hand, offers a significantly higher rate of 475: 1.

By maintaining an overvalued exchange rate, the Nigerian government can easily meet its obligations. On the other hand, this overvalued exchange rate is partially blamed for the decreasing monthly cross-border transfers to Nigeria. According to Nairanalytics, remittances, which are a major source of foreign exchange, fell from $ 2.05 billion in January 2020 to just $ 54 million in September this year.

History of two exchange rates

In the meantime, Aiesen tries in his remarks to convince the CBN to work towards a standardization of exchange rates and a transparent management of this resource. The resident representative is quoted as saying:

It would be useful to standardize rates to allow currency to fluctuate and to make foreign exchange more accessible to those in need.

The Nigerian government, like its counterparts on the African continent, has seen a significant drop in sales due to the effects of the Covid-19 pandemic. In addition to lower revenue, Nigeria is facing persistent foreign exchange scarcity, which in turn is increasing pressure on the local currency.

To address some of these challenges, the IMF representative advises the Nigerian government against increasing taxes. Instead, Aisen urges Nigeria to strengthen its tax administration by expanding the tax base and blocking leaks.

What do you think of the remarks made by the IMF representative? Let us know what you think in the comments section below.

Tags in this story

Bitcoin transfers, CBN crypto ban, Central Bank of Nigeria, COVID-19, cryptocurrencies, foreign exchange, IMF, International Monetary Fund, money laundering, naira, parallel market

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