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Nigeria’s Central Bank Outlines 5-Stage Step for Its Digital Naira Initiative

UTC by Benjamin Godfrey · 3 min read
Nigeria’s Central Bank Outlines 5-Stage Step for Its Digital Naira Initiative
Photo: Depositphotos

The proposed launch of the Digital Naira has been noted by the CBN to be a collective effort on the part of all stakeholders in the country’s financial ecosystem. 

The Nigerian Central Bank has provided a comprehensive guideline to the licensed financial institutions in the country with respect to its Digital Naira initiative. As reported by local media channel Nairametrics, the Central Bank informed the banks the eNaira project is billed to be developed through 5 major processes. The end-game for the apex bank will be to bolster financial inclusion initiatives and reduce the costs of transactions accordingly.

The first stage as noted in the issued guideline involves a Monetary Authority Suite, in which the CBN will be handling the issuance, distribution, redemption and burning of the digital currencies. Additionally, this stage will see the bank store data for the eNaira on a cloud server, as well as in monitoring and analyzing the currency transactions. The second guideline actively involves the financial institutions who will be able to request currency or issue stablecoins, manage digital currency across branches, KYC, identify and AML compliance capability.

The other suites include eGovernment in which the CBN will develop the capacity to process all of the digital currency transactions, the Merchants suite which will empower vendors to provide low-cost payment and business management software, POS, remote payment solutions, online capabilities, transaction analysis and reconciliation. The last suite involves the Retail consumers who will be at the centerpoint of the entire CBDC innovation. Here, the eNaira development team will seek to boost the user experience, security, and privacy of the new money.

Expectations from Local Banks per the Digital Naira Pursuit

The proposed launch of the Digital Naira has been noted by the CBN to be a collective effort on the part of all stakeholders in the country’s financial ecosystem.

Besides being tasked with the responsibility of promoting the adoption of the eNaira, Nigerian banks will also be tasked with providing world-class customer service. As a complement to the CBN’s issuance of the digital currency, banks will also be able to invite their customers to register for the e-Naira. Additionally, the institutions can generate codes to onboard customers who have been pre-verified by the firm.

Additionally, banks will be empowered to create digital wallets for the eNaira to support the Central Bank’s role in this regard. These services will not attract charges, and the digital currency initiative is expected to be integrated with no cost burden for the general public whatsoever.

As detailed in the reports, transactions involving user-to-merchants and P2P wallet transactions will come at no charge, offering an extra level of ease to all adopters.

Global CBDC Drive Gaining Momentum

The embrace of digital currency initiatives by governments around the world is gaining momentum. While the United States Federal Reserve Bank is on track to release its Digital Dollar report in early September according to Chairman, Jerome Powell, China is gradually creating a global clearing network for mobile payments to be settled in the Digital Yuan.

Over the next months, more advances in digital currency pursuits by central banks should make the rounds.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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