The earlier speculation that the Central Bank of Nigeria (CBN) will be launching a digital currency has now been confirmed by the apex bank itself.
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The Director, Information Technology Department, Central Bank of Nigeria (CBN), Mrs Rakiyat Mohammed, stated on June 10 that the CBN will be launching a Central Bank Digital Currency (CBDC) by 2022.
“…the Central Bank will be making special announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency to its populace.”
Back in February 2021, the Central Bank of Nigeria restricted activities of cryptocurrency exchanges through the banks while denying that it has outrightly banned trade in cryptocurrencies. The bank now appears to be making a turnaround as it will be launching a cousin of cryptocurrency with its own digital currency.
But the main reason the CBN might be getting into digital currency at this crucial moment is not far-fetched.
China is working towards achieving domestic use of a digital version of the yuan by the time of the 2022 Winter Olympics in Beijing. Indonesia, Egypt, South Africa, Norway, Bahamas, Japan, Ghana, Morocco and Kenya, Sweden and South Korea are also exploring the feasibility of digital currency. Therefore, the CBN is positing that Nigeria cannot be left behind.
However, Nigeria’s reason to launch a national digital currency seems flimsy wherein the opportunities such a digital currency will open up in the larger economy is ignored.
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As smartphone penetration increases among Nigeria’s teeming youth populace, the adoption of digital currency is expected to bloom at nearly the same rate.
Nigerians haven’t stopped trading and using cryptocurrencies despite the apex bank’s restriction. Beyond not wanting to be left behind, launching a digital currency is a move to revive remittances into the country. Direct remittances into Nigeria nosedived in 2020 due to the pandemic, amidst other reasons.
The CBN believes that digital currencies via the use of digital currency (stablecoin) will encourage foreign remittances into Nigeria.
Rakiyat Mohammed maintained at the banker’s committee meeting that:
“…digital money is not new in Nigeria. Just as we are about the third or fifth in the whole world as far as advancement in the use of digital money is concerned. So this is going to compliment the coins and cash that we have.
“…a recent report by EfiNA was that our target was to achieve 80% financial inclusion…Central Bank digital currency will accelerate our ability to meet this target.”
Also worthy of note is the CBN’s recognition of Nigeria’s growing status as one of the top destinations for cryptocurrency trading in the world. This development is in spite of the CBN ban on Nigerian banks enabling payments for cryptocurrency trading.
In essence, though the CBN will not admit that the rise of cryptocurrency trading cannot be stopped, it is doing all it can to provide seemingly better alternative digital currencies that are compatible with Nigeria’s fiat currency – Naira.
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