The director of Information Technology, Central Bank of Nigeria (CBN), Rukiya Mohammed discloed this to newsmen on Wednesday via webinar, themed “Digital currency and the prospects of CBDC in Nigeria”, organised by the committee of e-Business in industry Heads Nigeria (CeBIH).
Mohammed said that the use of digital payment was rising while cash payment was declining both in Nigeria and globally.
She said that over 85 per cent of Central Banks worldwide were considering digital currency and so CBN was also innovative to cope with global trends.
“CBDC would contribute to macro-economic growth in the country, if people adopt more of the usage of the e-naira, it would enhance more data to formulate macroeconomic policies.
“Also, when more countries have their own digital currencies, it would increase exchange of currency and be able to build cross border trade at a lower cost.
“Even though Nigeria has a good payment system, this would also improve Nigeria’s payments efficiency,“ she said.
She said the CBN has partnered with a lot of experts in digital currency technology providers such as MasterCard, came up with the design and would soon publish the design.
“CBN would focus on low amount payments at the introductory stage, instant settlement with low cost.
“CBDC would be legal tender with one e-naira equivalent to one naira which shows fundamental differences between CBDC and cryptocurrencies,” she said.
Also speaking, Dr Adesola Adedutan, Managing Director, First Bank Nigeria, said that the Central Bank of Nigeria CBDC was a game-changer that would provide an alternative payment system and would radically transform the payment landscape.
Adedutan, who was represented by the Banks deputy chief executive, Mr Francis Soba, said CBDC provides a platform for the government to leverage blockchain technology to maintain a centralized and institutional role over of the currency.
‘’It should be noted that there are significant differences between CBDCs and cryptocurrencies,” he said.
All You Need To Know About E-Naira
Below are things you should know about the nature of this innovation:
E-Naira is purely digital
The e-Naira would be a Central Bank Digital Currency (CBDC) which means that while it is regulated by the CBN, it is a token that would only exist in digital and electronic form.
E-Naira is universally transferable
The CBDC would be eligible for local and international transfers with little to no time lag and cheaper transaction fees than physical currencies. Also, it would allow you to transfer existing funds in your bank to your digital currency account.
E-Naira has a myriad of economic advantages
With the e-Naira, Nigerians can engage in easier cross-border trade, as well as enjoy a cheaper and faster inflow of remittances. Also, a digital currency would provide more financial opportunities for Nigerians as they would be able to create new business opportunities and financial products and services.
According to the CBN, another perk of the e-Naira is a reduction in the cost of operations and cash management. It would also leave a clearer footprint of digital transactions, making it easier for financial institutions to track transactions.
Financial Institutions would still be relevant
The digital currency would be implemented through a two-tiered model which would enable a structure that leaves room for public-private partnership. Just like the physical currency, the CBN will design the e-Naira but disseminate it through regulated financial institutions, which would then provide digital cash to individuals and businesses.
E-Naira not a Cryptocurrency
While all cryptocurrencies are digital currencies, it is important to note that not all digital currencies are cryptocurrencies. The e-Naira would be regulated by the Central Bank of Nigeria, but cryptocurrencies are not regulated by any government.
Implementation is on track
A recent development in the process of implementing digital currency is the selection of a technical fintech partner, Bitts Inc. After a thorough selection process, as prescribed by the Nigeria Public Procurement Act, Bitts Inc. emerged as a partner to the CBN for this innovative project.
Bitts Inc. prioritises the creation of payment systems that ensures an increase in social inclusion, financial inclusion and overall sustainable economic growth; the excellence in their operation methods has earned them acknowledgment from the Bretton Woods Institutions – IMF/World Bank. This is one of the reasons the CBN enlisted them for this crucial exercise.
Also, the company was the first fintech to digitize a national currency on a blockchain by creating a synthetic CBDC with the support of the Governor, Central Bank of Barbados and the country’s Minister of Finance.
As Nigeria counts down to her 61st Independence Day celebration, citizens can look forward to the start of a digital era where the CBN prioritises making financial operations more citizen-centric.