Kenya and Nigeria Central banks attack Cryptocurrencies, supports CBDCs

By: Ayegba Emmanuel

June 20, 2022 1:28 PM

The Central Banks of both Nigeria and kenya in a recent report downplayed the impact of cryptocurrencies as payment, with the crypto market volatility being a major reason why digital currencies such as crypto cant be accepted as a legal means of payment.

Aside from the fact that Nigeria and Kenya are both countries in Africa, Kenya also suffers from the same internecine conflicts and insecurities that have pipped Nigeria’s progress for a while now. Recently, both Nigerian and Kenyan central banks heavily attacked cryptocurrencies.

The two apex banks have been reported to say that cryptocurrencies are very unstable for them to become a widely used method of payment. In addition, the banks claim that cryptocurrencies also pose a risk to financial stability. They also  insisted that cryptocurrencies are too volatile to become an acceptable payment method.

Kinsley Obiora, the deputy governor of the Central Bank of Nigeria (CBN), outlined why the Nigerian central bank is hostile to cryptocurrency in a virtual summit hosted by the International Monetary Fund (IMF). "The volatility it causes can become a source of instability in the system," Obiora asserted emphatically.

To back up their assertion, Kenyan central bank governor Patric Njoroge and Kingsley Obiora agree that a central bank digital currency has a higher chance of closing the financial exclusion gap. Only a central bank digital currency (CBDC) has the potential to lower transaction costs, according to the central bankers.

In his own words, Njoroge questioned what he considered to be the hype around cryptocurrencies. Nonetheless, he intimated that crypto assets could be regulated as a "wealth product" by his institution in the future. In addition to regulating privately built digital currencies as a wealth product, Njoroge speculated that Kenya's Central Bank (CBK) may one day follow Nigeria's lead and issue its own CBDC.