In June 2021, the Central Bank of Nigeria (CBN) announced plans to launch an e-Naira digital currency by October 2021, joining 81 other countries that are seriously considering digital currencies.
The CBN’s decision came after two years of deliberation on digital currency technology. Another motivation for launching digital money is the CBN’s intention to achieve 80% financial inclusion by the end of 2021.
While there is a lot of information about this soon-to-be-launched digital currency, here are six things you should know about the nature of this innovation:
It’s entirely digital.
The e-Naira would be a Central Bank Digital Currency (CBDC), which means that, while it would be regulated by the CBN, it would only exist as a token in digital and electronic form.
It can be transferred anywhere in the world.
The CBDC would be able to make local and international transfers with little to no time lag and lower transaction fees than physical currencies. It would also allow you to transfer funds from your bank account to your digital currency account.
It has a plethora of economic benefits.
Nigerians can now engage in easier cross-border trade and receive cheaper and faster remittances thanks to the e-Naira. A digital currency would also provide more financial opportunities for Nigerians by allowing them to create new business opportunities as well as financial products and services.
Another advantage of the e-Naira, according to the CBN, is a reduction in the cost of operations and cash management. It would also leave a clearer footprint of digital transactions, making tracking transactions easier for financial institutions.
Financial institutions would continue to be important.
The digital currency would be implemented in a two-tiered model, allowing for a structure that allows for public-private partnerships. The CBN will design the e-Naira, just like the physical currency, but it will be distributed through regulated financial institutions, which will then provide digital cash to individuals and businesses.
e-Naira is not a type of cryptocurrency.
While all cryptocurrencies are digital currencies, not all digital currencies are cryptocurrencies. The Central Bank of Nigeria would regulate the e-Naira, but cryptocurrencies are not regulated by any government.
The implementation is proceeding as planned.
The selection of a technical fintech partner, Bitts Inc., is a recent development in the process of implementing digital currency. Bitts Inc. emerged as a partner to the CBN for this innovative project after a thorough selection process as prescribed by the Nigeria Public Procurement Act.
Bitts Inc. prioritizes the development of payment systems that increase social inclusion, financial inclusion, and overall sustainable economic growth; the Bretton Woods Institutions – IMF/World Bank – have recognized their excellence in their operation methods. This is one of the reasons the CBN chose them for this critical task.
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In addition, the company was the first fintech to create a synthetic CBDC with the support of the Governor of the Central Bank of Barbados and the country’s Minister of Finance.
As Nigeria approaches its 61st Independence Day, citizens can look forward to the start of a digital era in which the Central Bank of Nigeria prioritizes making financial operations more citizen-centric.
According to the Geo-economics Centre, five countries have fully launched digital currencies: the Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia, and Grenada; if all goes well, Nigeria will be one of them.
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