NDIC concerned about evolution of digital currencies in banking

Nigeria Deposit Insurance Corporation (NDIC) has expressed concern over the development of digital currencies. According to local reports, digital currencies have brought more problems for the banking industry compared to other technological changes.

NDIC believes cryptocurrencies have become significant concerns to the banking industry. While speaking at the third NDIC-forum organized for editors in Lagos, Umaru Ibrahim, the CEO of NDIC said evolution of digital currencies had brought many different challenges from what the banking industry confronted a few years ago. He stated:

“The partial dis-intermediation of the banking system arising from the proliferation of digital currencies such as bitcoin, as well as the activities of FinTechs is all of critical concern to the corporation.”

He explained that global financial stability had suffered many forms of crises in the last few years. However, the evolution of cryptocurrencies has been of great concern for the cooperation.

Ibrahim further added that the objective of the editors’ forum is to sensitize Nigerians on its activities through a variety of hybrid initiatives across multiple platforms. He added that the NDIC, in close collaboration with the Central Bank of Nigeria (CBN) and other key players in the nation’s financial system, are working on several initiatives to accelerate financial literacy and financial inclusion, especially among rural communities nationwide.

The introduction of virtual currencies was not well received in financial circles. Despite a few financial authorities taking measures to warm up to this technology, many still believe these virtual currencies will cause more harm than good to the banking system.

Lack of a regulatory board for the crypto industry has and still is a vital issue for governments and banking institution. With no particular central body governing activities, individuals are likely to take advantage of the situation for illegal activities.

Additionally, the massive and quick adoption of virtual currencies will lead to decreased revenue for governments. So far, few jurisdictions have been able to create effective tax policies for virtual currencies.

Financial authorities and governments have taken a stance against cryptocurrencies. Countries like India have banned the use of virtual currencies.

However, it is worth mention that some changes brought about by virtual currencies have helped the banking industry. For instance, many these digital currencies have increased the speed of domestic and cross-border transaction. They have also managed to assist communities in remote areas to access financial systems.