The organization founded to foster monetary cooperation worldwide has warned Nigeria that its central bank digital currency (CBDC) is a money laundering risk.
The caution, issued by the International Monetary Fund (IMF) to the Central Bank of Nigeria about Naira, the government- issued CBDC, comes after saying it was safer than bitcoin and other cryptocurrencies.
In a statement published this month, the IMF said using the eNaira for cross-border payments carries the risk of financing terrorism and money laundering. As a result, the IMF encouraged Nigeria’s central bank to conduct a comprehensive risk assessment with its anti-money laundering and combating the financing of terrorism.
“While the newly launched eNaira could help foster financial inclusion and improve the delivery of social assistance, close monitoring of associated risks will be important,” the IMF wrote.
The BlockCrypto.com reported Nigeria’s CBDC uses a tiered customer model to determine daily transaction limits, The BlockCrypto.com reported. Customers in the lowest tier, which includes the unbanked, can spend $120 daily while the upper tiers are limited to between $487 and $2,438.
The eNaira was introduced last fall by the central bank, a reversal of its ban on banks to service crypto exchanges earlier in the year.
Last week, Lael Brainard, governor of the Federal Reserve System, said the U.S. should be ready for the financial system of the future, which may include a central bank digital currency (CBDC). But she was careful not to say the U.S. will develop one any time soon.
Read more: Federal Reserve Governor Stresses the Importance of a US CBDC
Brainard said there is a high degree of concentration among a few dollar-pegged stablecoins. As of the first of the year, the largest stablecoin by market capitalization made up almost half of the market, and the four largest stablecoins together comprised by nearly 90%.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More