The Central Bank of Nigeria has sent a detailed guidance document on the Central Bank Digital Currency (CBDC) to financial institutions in the country. The document covers the testing and implementation of e-Nair.
The Central Bank of Nigeria has produced guidelines
Central Bank Digital Currency (CBDC) e-Naira. The guidelines have been sent to banks in the country which talks about the design and operations of the digital currency.
Nigeria joins CBDC club with e-Naira
Called e-Naira, the guidelines say it will have interest-free status. There will also be transaction limits, based on total value. The assets, of course, will serve as legal tender. The CBDC is likely to be implemented
by the end of 2021, the central bank said in June. Sponsored Sponsored The
e-Naira CBDC program itself will consist of five phases. The first involves the monetary authority package, essentially the central bank handling the core components of the product. This includes the issuance, distribution, redemption and burning of the currency.
Next is the financial institutions package, which deals with licensed financial institutions. These entities, like banks, can claim currency or issue stablecoins. They will also manage the digital currency in their branches and handle KYC/AML requirements.
Then comes the e-government package, where the government will process payments between businesses and customers. The last two stages relate to retailers and consumers, with the former focusing on business management software, remote payment solutions, online capabilities, etc., and the latter on user experience, privacy and security.
Nigeria is one of the more technologically advanced countries on the African continent. Cryptocurrencies are extremely popular in the country, with activity in this area easily surpassing that of other African countries.
The government has noticed this rise in popularity of cryptocurrencies
and there are some indications that regulation will be relatively accommodating. These comments follow the ban on cryptocurrencies by the Nigerian central bank. The rise of
CBDCs around the world
CBDCs are some of the most talked about developments in the cryptocurrency space this year. Governments have come together to collaborate on regulating cryptocurrencies around the world, and CBDCs are a natural outgrowth of these discussions. Several governments have announced their intentions to try out or conceptualize CBDCs.
Among the leading countries is China, which often makes headlines for its successful piloting of CBDCs. So far, the digital currency is popular among the country’s citizens who are quite familiar with the technology. The currency
should also appear in Hong Kong.
A notable confirmation of CBDC development from the country is the United States. Officials have talked about it in the past, stressing the urgency of the development, but there has been no confirmation. Nevertheless, it is almost certain that the United States will introduce CBDC as they are currently working on the regulatory framework.
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