The Central Bank of Nigeria has sent a document to all financial institutions containing guidelines to start preparation to launch their own central bank digital currency with the name of e-Naira. The document is detailed guidance regarding the design, experiment and implementation of the desired digital currency.
This move was already expected because Nigerian Central Bank had shown its intentions in June this year that it wants to launch its own CBDC by the end of this year. Nigeria is a technologically advanced country of the African continent where cryptocurrencies are very popular, but the Nigerian Central Bank has imposed a ban on crypto.
Coming back towards the guidelines, it is planned that e-Naira is given a non-interest-bearing status. Some restrictions will also be placed on transactions according to their total value, but it is clear that e-Naira will serve as a legal tender.
There will be a total of five stages that are already planned. The first will be related to the monetary authority suite, which will be the bank itself because it will handle product components itself. Its duties will be issuance, allocation, regeneration and destruction of currency (if needed).
The next stage is the financial institution suite, which is related to licensing of financial institutions. Banks can request for issuance of digital currency as per demand. They will handle distribution to their branches themselves and maintain security as per the requirements of KYC and AML policies.
The next phase is the eGovernment suite, according to which government will be responsible for managing payments between businesses and clients. The fourth step will be related to merchants who will focus on software and remote payment options. The last step will be concerning retail customers. The step will focus on user rights such as experience, privacy and security.
Global Popularity Of CBDCs
CBDCs have become a hot topic of crypto proponents this year. Governments have started to cooperate to form global regulations, and many governments have shown intentions to launch their own Central Bank Digital Currencies. After its crackdown on crypto miners, China is also keenly interested in CBDCs because most of its population is tech-savvy.
Although it is not confirmed yet, the CBDC launch by the United States is on the cards. Its government officials have already given hints about it, and it is certain that they are working on it.