smartbusinessinfohubNigeria set to launch its Digital currency (e-Naira) on 25th October, 2021 after CBN barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies in February.
The e-Naira Currency was first rumored to be launched on October 1, 2021 but was later postponed.
Central Bank Governor Godwin Emefiele has said the e-Naira Currency would operate as a wallet against which customers can hold existing funds in their bank account.
In a statement, Emefiele said the currency would accelerate financial inclusion and enable cheaper and faster.
The Central Bank of Nigeria (CBN) has inked a contract with a digital currency partner as it steps up plans to launch a central bank digital currency (CBDC) in Africa’s most populous country.
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The CBN has engaged a Barbados-based fintech company, Bitt, to help deliver a blockchain-based digital currency, which is due to be unveiled ‘later in the year’, the central bank announced this week.
The move comes less than a month after the central bank of Ghana, another sizeable West African state, announced an agreement with German company Giesecke+Devrient (G+D) to test a CBDC.
The CBN said that there had been a ‘significant explosion in the use of digital payments and the rise in the digital economy’ and that its decision to launch the a CBDC ‘follows an unmistakable global trend in which more than 85 per cent of central banks are now considering adopting digital currencies’.
The central bank, which has been running its digital currency explorations under the name ‘Project Giant’, said it had decided to digitise its currency, the naira, in 2017.
The planned digital currency, the e-Naira, has been developed through what the central bank described as a ‘long and thorough’ process.
CBN’s governor, Godwin Emefiele, listed the benefits to Nigeria of launching a state-backed digital currency as including increased cross-border trade, accelerated financial inclusion, cheaper and faster remittance inflows, easier targeted social interventions, as well as improvements in monetary policy effectiveness, payment systems efficiency and tax collection.
What is Digital Currency
According wikipedia, digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet.
Types of Digital Currencies
Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency. Digital currency may be recorded on a distributed database on the internet, a centralized electronic computer database which is owned by a company or bank.
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What is e-Naira Digital Currency ?
e-Naira is a digital currency to be issued by the Nigerian government with the same value as fiat naira (i.e. physical naira notes). It is to be purchased by the general public through FI and transferred into e-wallets maintained by customers.
When will e-Naira be Launch?
The CBN has announced they will launch a pilot scheme of the eNaira starting on October 1st, 2021. but later postponed, new date is 25th October, 2021
How will the e-Naira Digital Currency work?
The e-Naira will work as a digital version of the physical Naira.
Financial institutions licensed by the CBN will be responsible for ID verification, e-Naira payment processing, and creating wallets for customers to hold their e-Naira
How is e-Naira Different from Cryptocurrency?
Cryptocurrency is a decentralised form of encrypted digital currency based on blockchain technology whilst eNaira is a government-controlled digital currency envisaged to be more stable than cryptocurrency as its value is to be at parity with the country’s official currency.
What is the Benefit of e-Naira Currency over regular Digital Banking?
Unlike digital banking which involves customers transacting with money maintained by them in a bank, eNaira is actual money earned and maintained by customers in their e-wallets.
Consequently, customers will be able to transact with it like fiat currency without the involvement of intermediaries as is the case with digital banking.
Is e-Naira the same thing as Bitcoin?
No, unlike Bitcoin which is a cryptocurrency, the eNaira is a digital currency issued by the government.
This difference has a big impact on the stability of the currency.
For example, the eNaira currency will maintain the same value as the Naira. Therefore, its value will not rise and fall the way Bitcoin does, also meaning it is not something to invest in to grow your fortunes.
The eNaira simply makes it easier to facilitate transactions digitally without needing to be backed by cash.
Will e-Naira Currency Affect the Nigeria Economy?
For now, we are unclear what impact e-Naira Digital Currency will have on the Nigerian economy, if any at all.
However, the CBN believes the eNaira will greatly improve financial inclusion, payment processing, and tax collection, among other things.
Why Central Bank of Nigeria Embrace Digital Currency Now
Benefits of e-Naira Currency
- The Governor of Central Bank of Nigeria also listed the benefits of e-Naira coin to include;
- Increased cross-border trade
- Accelerated financial inclusion
- Cheaper and faster remittance inflows
- Easier targeted social interventions
- Improvements in monetary policy effectiveness
- Payment systems efficiency
- Tax collection.
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Conclusion
Central Bank need to enlighten Nigerians on how to really use the new Digital Currency.
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