By Shelly Melancon (Switzerland)
The government of Nigeria is considering having its own digital currency before the end of the year. The Central Bank of Nigeria (CBN) had issued a statement to this effect. This may be not unconnected to the attempts by countries such as China, United States of America, United Kingdom, Russia Venezuela to launch their central bank-backed digital currency. In fact, China has already made considerable progress on its attempts. It released the Digital Yuan in May, which according to reports is aimed at competing against and limiting the number of private payment gateways like Alipay that are springing up around the country.
Digital Currency: CBN Issued a Ban in February on Crypto Transactions
In February, the Central Bank of Nigeria issued a circular ordering banks across the country to stop extending their services to crypto exchanges. The statement further placed a ban on crypto transactions between individuals such that accounts who ran short of the order were closed and the funds in them were seized. This move was met by wild reactions both in the country and globally. The crypto-community in Nigeria was disappointed with the government’s decision, however, in no time, a solution was found. At the time, popular crypto exchange, Binance and other exchanges had deactivated direct deposits from bank accounts to users accounts, which prompted the P2P solution as an alternative on Binance platform. Surprisingly, at the time of the ban, the total volume of crypto transactions in Nigeria increased massively.
Also read:During a banker’s committee meeting, the Director of Information and Technology at the national bank revealed that the digital currency would be accessible to all Nigerians. She had further said, research on the concept of central bank digital currencies (CBDCs) had been going on for over two years and the inherent risks have been noted. Hence, they will be setting up a centralized framework that would involve all industry stakeholders to assess all the risks.
Date for the launch of the Digital Currency to be Announced Soon
The Director said, the proposed digital currency will be unlike privately issued digital currencies like Bitcoin and that a date for the commission of the digital currency will soon be announced. In a similar development, during the ban on crypto transactions, a Nigerian lawmaker had blamed cryptocurrencies for making the official currency of the country, Naira, useless. Others had said cryptocurrencies were responsible for the decline in forex remittance into the country and the depreciation in Naira. Truly, forex remittance reduced since Nigerians in Diaspora realized they could send money to their friends and relatives via cryptocurrency which would then be traded for Naira. Without doubt, the proposed digital currency will be backed by the Naira.
Before the latest statement by the Director of Information and Technology, the governor of CBN, Godwin Emefiele had in May hinted at a digital currency coming to life in the country. With the ban on crypto transactions, it does not seem likely that the CBN is committed to the idea of a digital currency. Besides, Nigerians may be unwilling to adopt it as soon as it is unveiled owing to issues on centralization.
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