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Electronic Currency (EC) is a legal tender that is issued and controlled by the Apex Bank [in the case of Nigeria, Central Bank of Nigeria (CBN)] in a digital form or format. It has the attributes of physical money though intangible. A N1 held in Digital Currency (EC) has an equal purchasing power as N1 held in tangible money. EC is a direct liability on the CBN and it is available to every Tom, Dick and Harry (Dare, Abu and Amaka).It is for every young, old, MSMEs etc provided there are basic skills on Information and Communication Technology (ICT) usage.

The main purpose of EC is for payment and transaction. It aims to facilitate the velocity of money amongst individuals, businesses and cross border trading. EC would bridge the gulf between the banked and the unbanked as it would work with USD code and promote financial inclusiveness. It can be in form of peer to peer (p2p), Business to Business (b2b) and so on.

WHAT ELECTRONIC CURRENCY (EC) IS NOT
Electronic Currency (EC) uses a similar platform as crypto currency called block chain technology but it is not a cryptocurrency or its variant. A block chain provides a systematic recording of transaction across a network of computers. It is not an investment that could result in a gain or a loss or diminution of asset. Therefore, it does not fulfil the investment motive for holding money. In short, it is not an interest bearing currency. Don’t expect any fluctuation of your held EC in your wallet that is different from the currency in your conventional bank account.

NIGERIA EC DEBUT
The CBN as part of its monetary policy added EC to the country financial sector to join the likes of Bahamas, East Caribbean region to mention but a few countries, and incidentally, the first in Africa. Some of the reasons the governor of CBN alluded to during the launch on the 26th October, 2021 are;
• Promote and facilitate financial inclusiveness,
• Enable direct welfare disbursement to citizens,
• Reduce the costs of processing cash.

ADVANTAGES
 Reduction of illicit activity such as drug, arm etc
 It makes tracking easy
 Ensure transparency through feasibility
 A threat to foreign currency
 May impact on inflationary pressure
 Reduction in round tripping
 It enhances diaspora remittances.

RISK
 It could crowd out investible fund from the conventional fiat currency held
in bank accounts if large numbers were to move money to their e-wallets.
 Cyber attack through hacking, phishing and other cyber threats.
 Lax in regulatory framework. Good as the EC looks; poor regulation can
mar its potentials.

CONCLUSIONS
One of the key challenges with crypto currency is the lack of regulation. It is laissez-faire in nature and form and it is subject to abuse. Financial system is built on accountability and trust which the CBN through digital currency is attempting to restore into the space. In order to achieve this, the CBN must have a team of staff that are well resourced and positioned especially in ICT to deliver, monitor and enrich the system.

It is my considered view that CBN must partner with the end users and other regulatory bodies by providing a platform for reporting abuses as well as a confidential and robust whistle blow policy.


MOI, Ph.D

The financial intermediation of the trio of Central Bank of Nigeria (CBN), Bank and Bureau De Change (BDC) in any growing or developed economy cannot be jettisoned. The main role of the CBN is supervisory and regulatory in nature as the duo of bank and BDC cannot function effectively and efficiently without a grounded CBN. The CBN creates and gives lives to them through rigorous registration and certification procedures, continuous monitoring and supervision, right policies and directive to stimulate growth and development in the country among others.

Bureau De Change (BDC) is a private business licensed by CBN to render service of buying and selling foreign currencies to the public. The main objective of BDC was to serve the retail end of the market by making $5000 or less available to end users for the purpose of private or business travels (PTA or BTA), tuition fee or medical bill payment. The reason for this intermediation seems credible in the face of administrative bottleneck encountered by small end users of foreign currencies from commercial banks.

BDC has over time grown exponentially in Nigeria with allegation of over concentration of licensed operators in a particular section of the country. According to the Association of Bureaux De Change Operators of Nig (ABCON), there are over 5000 of them providing over 15,000 of jobs as at 2020 as well as providing data to help Central Bank in day to day foreign exchange management (Bus. day, Sept 25th 2020). One can deduce therefore that they remain critical and necessary for economic growth.

SOURCES OF BDC PROBLEMS

Excessive profiteering: It is wrong for the owners and operators of BDC to abuse the privilege of serving the public through abnormal margin under the pretence of forces of demand and supply or artificial scarcity since they enjoy subsidy from the CBN. For instance, how can they justify an intervention via weekly auction at 410 USD and trade same for 515 USD? By so doing, they seem to have deviated from their original mandate to make availability of foreign exchange currencies to underserved and unserved segment of the market.

Funding Corruption and Money Laundering: According to the CBN governor, Godwin Emefele, Bureau De Change has become (illegal) wholesale dealers in foreign exchange to the tune of millions of dollars per transaction, proliferation of BDC to obtain forex from CBN, dollarizing the economy etc. What a mismatched of mandate! Instead of being a partner in progress to apex bank, BDC operators have continued to undermine the core objective of CBN to stabilize foreign exchange through round-tripping and other vices. The effort of ABCON at holding its members to account seems little or no effect in the face of the CBN findings.

SALE OF FOREIGN EXCHANGE

The growth in BDC operators since CBN began its sale of foreign exchange to the sector has been astronomical from mere 74 in 2005 to almost 5500 as at 27th July, 2021 according CBN, and should give any regulatory body a concern in terms of monitoring and ensuring compliance. CBN waited too late but better late than never.

Similarly, the policy of selling FX to BDC might have been a counter balancing one because Nigeria is the only country in the committee of nations where such policy is in place. Our policy choice must be sustainable going forward.

SUMMARY

The regulatory power of Apex Bank is guided under Bank & other Financial Institutions Act (BOFIA) & Foreign Exchange [Monitoring and Miscellaneous Provisions] Act No. 17 of 1995. This power must be used effectively and efficiently at all times to direct, monitor and punish erring bank and others without any fear or favour in the best interest of the society.

It is therefore my considered opinion that the decision of the CBN to exclude BDC from the sale of foreign exchange should help in reducing the burden of monitoring and stabilise the foreign exchange market as all eyes will now be shifted to commercial bank to ensure compliance with foreign exchange guideline.

MOI, Ph.D