Osinbajo: Why the CBN needs to adopt blockchain technology

Vice President Yemi Osinbajo says Nigeria may need to further expand the scope of banking licenses to accommodate more players in the financial intermediation value chain.

Osinbajo said this on Monday during his keynote address at the third edition of the Nigeria Digital Economic Summit (NDES) in Abuja.

Speaking on the topic “web 3.0, blockchain and DeFi: the impact of Africa’s digital economy”, Osinbajo urged central banks around the world to adopt blockchain technology.

He said blockchain technology, which allows digital information and transaction records to be securely stored and distributed, could disrupt central banking globally if it was not absorbed into the system.

By 2021, the Central Bank of Nigeria (CBN) ordered the banks to close accounts of persons or entities involved in cryptocurrency transactions in their systems.

“From a policy perspective here in Nigeria, we may need to expand the range of banking licenses available to enable more players in the financial intermediation value chain,” Osinbajo said.

“Even central banks around the world will have to rethink their roles since blockchain will challenge the centralization of monetary authority with its clear imperfections.

“Who knows? We may actually be in the last days of the central banking system as we know it.

“Either central banking systems around the world will adopt blockchain technology, or they will be taken over by blockchain technology.

“We are certainly, in my view, the last in the central banking system; which means that the space is open to all kinds of innovation in the central banking area.”

Osinbajo further said that clear rules must be set to support crypto markets and trading of other digital assets.

He said it was clear that the same old banking licenses that were in use were no longer sustainable.

“Previously, there was only one type of banking license that cost N25 billion in recent years. These are excellent policy changes that took place with a lot of pressure from young men and women in the technology and entertainment space, he added.

“The CBN has changed and there are different types of banking licenses and that is why we have fintechs, the unicorns because they use different cadres with CBN licenses that do not require N25 billion share capital.

“So, for example, Kuda and several others have a different type of license. Flutterwave and Paystack are in some form of banking.

“With the new iteration, with web 3, we have to rethink and create other types of licenses that are much cheaper, so that more participants can enter that space.”

Lanre Osibona, Founder and CEO, Foresight Group, also said digital transformation was a formidable force for change in Nigeria.

Osibona said a concerted effort is needed to drive digital transformation in Nigeria.

“Together, we must begin to address strategic actions that will support Africa’s technological transformation as well as Nigeria’s technological ecosystem and digital economy,” he said.

“Innovation to transform sectors including banking and finance, health, education, agriculture, hospitality and urban and industrial development is essential.

“Blockchain technology for agriculture is gaining momentum, especially now for traceability, access, market and precision monitoring of critical issues identified in the food value chain of the agricultural sector from production to final production.”