Nigeria unveils digital currency after banning cryptos

NIGERIA – The Central Bank of Nigeria joined a growing list of emerging markets betting on digital money to cut transaction costs and boost participation in the formal financial system.

The unveiling of the eNaira is a culmination of several years of research by the country in advancing the boundaries of the payment system, making transactions easier and seamless.

The digital currency and its underlining technology called blockchain are expected to increase Nigeria’s GDP and remittances, President Muhammadu Buhari said in a televised speech at the launch in Abuja, the capital.

The issuance of the digital currency comes after the central bank earlier in February 2021 outlawed banks and financial institutions from transacting in or operating in cryptocurrencies as they posed a threat to the financial system.

Central bank digital currencies, or CBDCs, are national currency — unlike their crypto counterparts, such as bitcoin and Ethereum, which are prized, in part, because they are not tied to fiat currency.

The eNaira will complement the physical naira, which has weakened 5.6% this year 2021 despite the central bank’s efforts to stabilize the currency.

The Central Bank of Nigeria in August selected Bitt as a technical partner to help create the currency that was initially due to be rolled out on 1 October.

“This Central Bank Digital Currency is among the first in the world and thus authorities have put measures in place to deal with any issues that might arise from the pilot implementation of the eNaira, whose theme is Same Naira, More Possibilities,” said Osita Nwanisobi, Director-Corporate Communication- Central Bank of Nigeria.

Nigeria joins the Bahamas and the Eastern Caribbean Central Bank in being among the first jurisdictions in the world to roll out national digital currencies.

China launched a pilot version of its “digital renminbi” earlier this year 2021.

In Africa, nations from Ghana to South Africa are testing digital forms of their legal tender to allow for faster and cheaper money transactions, without losing control over their monetary systems.

The Nigerian digital currency will complement bills in circulation and is expected to boost cross-border trade and financial inclusion, make transactions more efficient as well as improve monetary policy, according to the central bank.  

The Central Bank has said it will ensure the digital cash is available to all, particularly the unbanked as well as those living in the rural areas.

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