CBN issues guideline to Nigerian banks on e-Naira onboarding
e-Naira – following the Central Bank of Nigeria’s press release in August detailing its readiness to launch the pilot scheme of its digital currency in October 1, 2021 the apex bank has released a blue print to further guide Deposit Money banks into being the active frontiers to push the digital currency for mass adoption.
However, the creation of the e-Naira became a child of necessity following the ban of Bitcoin and crypto related transactions in the Nigeria’s financial system in February 5, 2021.
The apex bank in a circular had cautioned the banks to stop facilitating transactions to this regard forthwith as well should close down all crypto related accounts and report existing ones. Citing inability in identifying individual users, and the potency of crypto in providing a safe haven for Money Laundering and Terrorism Financing.
This however, was envisaged as a wrong step in the wrong direction given the position of the now global economy and how it has become a tool promoting prosperity and quality of lives across the globe.
Youth unemployment has been stemmed among other benefits.
About the e-Naira
The e-Naira is meant to be a legal tender wherein it will be used by Nigerians for settlement of goods and services, it will be generally acceptable across board aside the naira note.
Interestingly a non-interest bearing Central Bank Digital Currency (CBDC), it will have a transaction limit per customer, where participants are divided into five capacities.
Why CBN is keen on e-Naira?
Apart from appeasing Nigerians with Bitcoin and crypto alternatives having banned them initially, you will understand that the CBDCs are the latest world hack and countries are working to have them at all cost.
Additionally, the attention cryptocurrencies are receiving globally has become a source of concern for CBN so its fears are well understood.
You should also be aware that countries are adopting CBDCs given the reality of the ability of Blockchain, how fast, cheap, and reliable the protocols are.
CBN in its remark stressed that the objective of the e-Naira is to deepen financial inclusion, improve payments efficiency, revenue and tax collection among other objectives.
Comparing the e-Naira with Bitcoin
The e-Naira according to an expert will not grow or plummet in value like Biytcoin/cryptocurrencies, however, will function the same as the naira which relatively shows that their value will remain the same.
According to Chuta, issuing CBDC will not turn any fortune around, the e-Naira is pegged to the naira which means it has the value of the naira.
Additionally, do not expect an insulation against inflation, that’s not happening, just think about stable coin it’s pegged to a fiat currency as such has the same value with it.
How the e-Naira will work/onboarding
Participants in this program are featured in the below stages
The Monetary authority suite: This involved issuing, distributing, and redeeming the currency, storing data on a cloud server, which currency will be analyzed and monitored strictly by the CBN itself.
The Financial institutions suite: The idea is that the financial institutions will request currency and issue stablecoins, as well manage digital currency across their branches.
Additionally, play a key role of identifying customers and users of the CBDC, with a detailed compliance to the Anti-Money Laundering and Terrorism Financing Act.
The E-Government suite: This is a leniency for the government to be able to process digital payment efficiently as sent and received by businesses and citizens at large.
Merchants are to provide low cost payment and business management software, POS, remote payment solutions, online capability, transaction analysis, and transaction reconciliation.
The Retail consumer suite: Here’s an ideal to feature user centered design to equalize a greater user experience. The architecture will be designed to enable innovation, define advance privacy and security.
It shall be the responsibility of Nigerian banks to promote and market the issued digital currency as a cash alternative to existing and potential customers at large.