The Central Bank of Nigeria has sent a detailed document regarding central bank digital currency (CBDC) guidance to financial institutions in the country. The document covers the testing and implementation of the e-Naira.
The Central Bank of Nigeria has drafted guidelines concerning a central bank digital currency. The guidelines have been sent to banks in the country, which talk about the design and operations of the digital currency.
Nigeria joins the CBDC club
Called the e-Naira, the guideline says that it will have a non-interest-bearing status. There will also be transaction limits, based on a total value. The asset, of course, will serve as legal tender. The CBDC will likely be implemented by the end of 2021, the Central Bank said in June.
The CBDC program itself will have five stages. The first concerns the monetary authority suite, which is essentially the central bank handling the primary product components. This includes the issuance, distribution, redemption, and destruction of the currency.
Next is the financial institution suite, which concerns licensed financial institutions. These entities, like banks, can request the currency or issue stablecoins. They will also manage the digital currency across their branches, and handle KYC/AML requirements.
The eGovernment suite follows, which sees the government process the payments between businesses and customers. The last two phases relate to merchants and retail consumers, with the former focused on business management software, remote payment solutions, and online capabilities, et al., and the latter focused on user experience, privacy, and security.
Nigeria is one of the more technologically savvy countries in the African continent. Cryptocurrencies are extremely popular in the nation, and activity easily eclipses that of other African nations.
The government has noted this rise in cryptocurrency popularity, and there is some indication that the regulation will be relatively amenable. Those remarks followed a ban on crypto by the Nigerian central bank.
CBDCs developments growing worldwide
CBDCs are among the most discussed developments in the crypto space this year. Governments have banded together to cooperate on crypto regulation globally, and CBDCs are natural off-shoots of those discussions. Several governments have announced their intentions to either trial or conceptualize a CBDC.
Among the leading nations is China, which often finds itself in the headlines for its successful CBDC pilots. So far, the digital currency has been popular among citizens in the country, who are quite tech-savvy, to begin with. The currency should also make a bigger appearance in Hong Kong.
One notable confirmation of CBDC development from a country is that of the United States. Officials have talked about it in the past, stressing its urgent development, but there has been no confirmation. Still, it is all but certain that the U.S. will come up with a CBDC, as it currently works on a regulatory framework.