Central Bank of Nigeria gets ready for Digital Currency launch
The Central Bank of Nigeria (CBN), has reportedly circulated a document to its stakeholders with detailed plans on introducing a digital currency called e-naira which is expected to come into circulation by October 1.
The document spells out 5 stages for the rollout of the digital currency with the first stage being all about creation, issuing, and the destruction of the currency. As far as the second stage is concerned, which the CBN calls the Financial Institution Suite, this is more to do with the licensed financial firms (like banks) to request for the currency and issue the same while at the same time, watching for the transactions across their various branches for any suspicious financial activity, which they would then be able to pin down.
The third stage would begin as the digital currency begins to circulate among the users and the merchants and the businesses would then be needed to provide low-cost payments software, POS terminals, and other means for the currency to be able to circulate freely among the users and transaction reporting, similar to that of the fiat currency, would also begin to happen at this stage. The final stage would be more concerned about the rollout procedures, feedback, security measures, privacy, etc. and if and when the digital currency reaches this stage, it would mean that the rollout has been complete and successful as well.
It should be noted that it was at the beginning of the year that the CBN had banned all crypto-related transactions within the country and had also issued notice to banks to shut down accounts that were carrying out such transactions. It is now understood that this banning was related to the plans of the central bank to launch its own CBDC as it wanted to clear the decks and make sure that other forms of crypto were not circulating within the system when it launched its digital currency.
This is likely to be the measure that may be followed by many countries like India where news has been circulating that crypto transactions may be banned while at the same time, the government itself, through the central bank, would be launching its own CBDC and this would give it more control over how they are issued and used by the general public and can be tracked and reconciled as well, just like fiat currencies.