The Central Bank of Nigeria (CBN) will launch its digital currency, the eNaira, on Monday, Bloomberg reported, cited by CoinDesk. The eNaira aims to complement the physical naira, not replace it. According to an emailed statement from CBN, it will “make financial transactions easier and seamless for every strata of the society.”
Launch originally set for the beginning of October
The eNaira took several years to develop. In August, Bitt Inc. was selected as a technical partner to help create the digital currency. The central bank announced plans to introduce the virtual ledger four months after banning cryptocurrency transactions in February, saying they were a threat to the financial system.
Originally, the launch had been set for Oct. 1 – 4, but was delayed because of the country 61st anniversary of independence. The currency is supposed to help reduce Nigeria’s reliance on cash as well as contribute to economic stability in the country. The central bank does not expect all banking customers to immediately start using the currency.
Government struggling with crypto
The Nigerian government, in particular financial officials, have struggled with the increasing popularity of cryptocurrency in the country. The country sees CBDCs as an effective means of combating digital assets’ increasing popularity in these new times. A wallet approved by the central bank will accompany the eNaira. Users can choose to use it to make payments on the go or link it to their bank accounts.
The pros and cons of CBDCs
CBDCs work just like the money people see when they check their bank accounts on the internet. The central bank will issue eNaira, and it will be held directly by users in their digital wallets. Unlike Bitcoin and other cryptocurrencies, which are unbacked, unregulated, and decentralized, central bank digital currencies are centralized, regulated, and backed by a regular, usually the central bank in the country. Typically, these currencies are pegged to the fiat money used in the country.
Samuel Sule, a director with the Renaissance Capital investment bank, commented:
The eNaira is the Central Bank of Nigeria’s attempt to stay in tandem with other global central banks as decentralized modes of storing value and payment become more mainstream. There are underlying philosophical questions around the centralization of digital currencies, which could make it unappealing to a large section of its users. That said, monetary policy legally remains the exclusive realm of central banks. Thus, all work done around new modes of value storage and transmission is justifiable.
