IMF throw weight behind CBN’s ban on Cryptocurrency, says its being used for money laundering

The world’s financial body, International Monetary Fund (IMF) has thrown its weight behind the ban on crypto currencies by Nigeria’s Central Bank, (CBN), saying, it’s being used for money laundering and drug trafficking.

The Central Bank last week banned Crypto currencies transactions by banks in Nigeria, citing money laundering for terrorism purposes and drugs trafficking, which was confirmed by the IMF.

The IMF Resident Representative for Nigeria, Mr. Ari Aisen, made this known on Thursday, during a virtual briefing on the recently published 2020 Article IV IMF Staff Report for Nigeria.

According to Aisen, many Central Banks around the world, have taken similar policy decisions as the CBN.

His words: “The issue with some of the crypto currencies is that perhaps some care should be taken about their activities. The use of crypto currencies is a concern. That is why some central banks, not only in Nigeria have these concerns about what kind of the activities these crypto currencies are put and how best to monitor those activities.

“Some of them may be illegal activities and may be related to money laundering, even drugs or other illegal things. It is natural that the monetary authorities will be concerned about how best to supervise and increase their oversight regarding the use of crypto currencies.

“The CBN is thinking closely about its trade-offs and is trying to design the best policy in the interest of the payment system and the sustainability of the financial sector.”

The IMF official called for the “unification of foreign exchange rates,” to make the management of foreign exchange (forex) more transparent.

Concerning forex scarcity, Aisen stated that “there has been some level of scarcity of foreign exchange out there and it would be useful to unify rates to allow it flunctuate and to make forex more accessible to those who needed them”.

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Speaking on Nigeria’s debt to GDP ratio, the IMF official said: “Nigeria’s Debt/GDP ratio has not reached a level of overt concern.”

He however, cautioned government to ensure that debt/GDP was not allowed to reach a level that would make it unsustainable.

According to him, “it is important to manage borrowed funds properly for the economic benefits of the nation”.

To the IMF, the government should pay more attention to the ratio of debt service to revenue. He lamented that the nation’s “revenue profile was very low and therefore not enough to meet budgetary expenditure provisions. If there is one policy that has to be a top policy priority it is how to raise revenue” he said.

While calling for increased revenue, Aisen warned the government against raising taxes stressing that this is not the right time to raise tax rate, but rather to strengthen tax administration by expanding the tax base and block leakages.

The IMF official called on the government to be transparent in its utilization of the $3.5 billion IMF facility to Nigeria.