Earlier this year, we can recall that the Central Bank of Nigeria instructed banks and other financial institutions to abstain from dealing with cryptocurrency and facilitating payment for cryptocurrency exchanges.
This result of this order was the departure of many crypto-based companies from Nigeria, and the volume of cryptocurrency exchanges was reduced drastically.
However, the CBN has recently launched a project titled “Project Giant”; a project to generate and issue a government-controlled digital currency in Nigeria known as “eNaira”. This article covers the true meaning of the new digital currency and the benefits it will offer Nigerians.
What Is eNaira?
eNaira is a prospective digital currency to be issued by the Nigerian government with the same value as physical naira notes. It is to be bought by the general public through financial institutions or intermediaries and transferred into e-wallets maintained by customers. It is comparable to the Swedish e-krona.
The Operation Of eNaira In Practise.
The CBN will supply eNaira to licensed financial institutions(intermediaries) for onward supply to individuals.
Thereafter, financial institutions will maintain treasury wallets to enable them to receive eNaira from CBN. The eNaira transactions will run on new and existing systems which include the Nigeria inter-Bank Settlement System plc(NIBSS).
The four major parties in the operation of the eNaira will be
- The CBN
- The licensed financial institutions(intermediaries)
- Businesses and merchants
- Customers
Upon the launch of eNaira, the CBN will provide interim e-wallets for customers until the intermediaries can develop and launch their wallets.
The Prospective Benefits Of the eNaira Project.
The eNaira project is likely to offer some convenience and benefits to Nigerians.
- Unlike digital banking where money is being maintained by banks on behalf of the customer, the eNaira project will make it possible for customers to maintain their money in their e-wallets.
- Customers will be able to transact with their money without the involvement of intermediaries.
- Cross-border transactions will be easier and less costly.
- It will reduce the cost and time of transactions.
- It will be an opportunity for people who do not have bank accounts to make secure transactions without involving any bank.
Conclusion
The success of this project depends on the willingness of individuals, businesses, government agencies to maintain e-wallets.
However, this project can be hampered by several factors like lack of power, illiteracy, lack of internet coverage, and the volatility of the currency but this Is a great step in achieving a cashless economy.
