Nigeria is looking to put adequate measures to safeguard its retail CBDC from operational and cyber security risks ahead of a pilot slated for October 2021, the Central Bank of Nigeria (CBN) has said
CBN has indicated that the digital currency will be designated as critical national infrastructure. This is based on information present on a document obtained by a local publication in Nigeria.
The bank has also indicated that it will apply compliance and regulatory measures to protect the digital currency from disruptive competition.
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However, the bank says that the CBDC will initially co-exist with current payment systems and this will help address interoperability risks that might be associated with its implementation
But the bank expects the e-Naira will introduce new approaches to payment as well as bring about new bank and non- bank players in the financial system.
CBN further predicts that the digital currency will introduce a new range of banking services and integration with new systems, providing new possibilities for the payment architecture.
On how the digital currency would find its way into the economy, the bank intends to use a public-private partnership whereby it would design the e-Naira and distribute through regulated financial institutions, while the financial institutions would in turn provide the digital cash to individuals and businesses.
In a recent monetary policy committee meeting, Central Bank governor, Godwin Emefiele, illustrated how the digital currency would be introduced to the economy:
“Of course, when this starts, the CBN will move some of the balances of banks with CBN to those banks in digital currency. So, you go to your bank, you have N10 million and you say you want to convert N2 million out of your N10 million into a digital currency. They will debit your account and move it to your wallet of N2 million digital currency, which you can spend across countries.”
– Governor, Central Bank of Nigeria (CBN)
Some of the benefits the bank has laid out to expect from the e-Naira include:
- E-Naira would lower the cost of operations and cash management
- Improve visibility and insight of transaction date for financial institutions
- Create new business opportunities from emerging business models, financial products, and services
- Cheaper and more efficient transactions
Finally, the bank’s governor indicated that many countries are at an advanced stage of developing CBDCs, but Nigeria is looking to bring the digital currency in operation by October 2021.
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RECOMMENDED READING: The South African Reserve Bank Commences Feasibility Study for a General-Purpose Central Bank Digital Currency
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