Nigeria’s Digital Currency Will Facilitate Cross Border Trade– CBN

The Central Bank of Nigeria has said that its decision to create a digital currency for Nigeria is to facilitate cross border trade at the least possible costs.

The apex bank said this while explaining the economic implications and importance of a centralized and regulated digital currency in Nigeria.

The apex bank had in line with global trends revealed plans to launch the e-naira, a digital equivalent of the naira in October.

Speaking about the project on Wednesday in Abuja, the Director, Information and Technology, CBN, Rakitya Muhammed, said that the introduction of the e-naira can catalyze Nigeria’s digital economy, boost cross border trade and enable better macroeconomic policy formulation.

Muhammed spoke virtually at the Third Quarter Industry Forum of the Committee of E-business Industry Heads.

She spoke on the theme, “Digital Currency and the Prospects of Central Bank Digital Currency in Nigeria”.

She said, “If people adopt more of the usage of the e-naira, then we will be able to have more data to formulate better macroeconomic policies.

“And when countries come on board and create their own digital currencies, then we will be able to have faster exchange of currencies and therefore we might be able to boost cross border trade at a much lower cost.

“Of-course payment efficiency, even though we know that Nigeria has one of the best payment systems in the world, we will still be able to improve on that.”

“We believe that the e-naira will be a catalyst for digital economy because the people who are outside the formal banking sector will be integrated.”

Speaking on the design of the e-naira, Muhammed stated that the digital currency would soon be revealed as the apex bank had concluded work on its development.

The e-naira, she noted, will be a legal tender like the fiat naira, noting that it will not replace but complementary the naira.

The CBN Director also stated that just like in other climes, the Nigeria’s digital currency will guarantee anonymity of transactions.

She added, “In terms of the e-naira design, it will be a legal tender just like cash which is one of the fundamental differences between it and the cryptocurrency.

“One e-naira will be equal to one fiat naira, and we adopted a two-tier retail model that would be a lot less disruption into the financial system.

“Our banks, payment service providers and Fintech are all going to be onboard and we are going to key to the infrastructure they have already and incorporate the new system.

“It is not meant to replace the cash we have only to supplement.

“We chose an account-based implementation because we want to tie the wallet to the digital identity of the user.”

On the anonymity of transactions, she added, “It would be value based which means that we will see the amount of money changing hands without necessarily seeing who is behind the transactions so anonymity is complete and absolute.

“This will allow us to be able to conduct their AML/KYC operations. It is going to be non-interest bearing at least for now.”