The central bank of Nigeria is set to launch a digital currency called E-naira. This is simply the Nigeria digital currency. It is not a cryptocurrency, but it uses technology for digital currency from a fintech company based in Barbados that uses blockchain and distributed ledger technology to enable safe transactions with seamless mobile money. Basically, their main objective is to develop payment systems for institutions called Bitt, inc. The Nigeria central bank claims to have chosen Bitt inc. from a very high competition of bidders. They claim to have chosen them due to their tested and trusted building digital currency experience. The E-naira is also called a CBDC (central bank digital currency). Digital currency is the electronic form of fiat money issued by governments. However, many confuse it with cryptocurrency, which is a store of value secured by encryption.
The central bank governor Godwin Emefiele said the “e-naira” would operate as a wallet against which customers can hold existing funds in their bank account. He has also encouraged Nigerians to embrace this new currency as it is safer than cryptocurrencies. The central bank of a country supervises digital currency. Cryptocurrencies are not regulated by any government, reason why the authorities warn against bitcoin, Ethereum and the likes. The e-Naira would only exist in digital and electronic form. Individuals and financial institutions can track transactions easier. Local and international transfers can be made within a bit of time and at cheaper rates. It simplifies cross-border trade and guarantees a faster inflow of remittances. Users would be able to transfer existing funds in bank accounts to their digital currency account.
The CBN says it will be responsible for issuing distribution, redemption, and destruction of the E naira currency. Afterwards, licensed financial institutions like banks will be able to request and issue stable coins. The Nigerian government will now become more involved and digital process payments sent and received from the citizens and businesses. We should also expect merchants and retail, which is basically how the e-naira will work and flow.
The e-Naira is expected to help Nigerians create new business opportunities, financial products & services, and reduce operations and cash management costs. However, there have been many questions from Nigerians about the digital currency, which is yet to be answered for now.
According to The Atlantic Council, more than 80 countries are exploring a CBDC against 35 countries in May 2020.
Reference
Nairametrics.com
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