eNaira Currency – The Central Bank of Nigeria (“CBN”) issued a directive to banks and other financial institutions on February 5th, 2021, prohibiting them from dealing with cryptocurrency (a digital currency) or enabling payment for cryptocurrency trades. As a result, a number of crypto-based businesses have been driven out of the Nigerian market, and the rise of other digital and virtual currencies has decreased.
On June 24, 2021, the CBN announced the commencement of “Project Giant,” a project to develop and issue a government-controlled digital currency in Nigeria called as “eNaira.” The CBN distributed a presentation to regulated Financial Institutions (“FI”) on August 27, 2021, outlining instructions for the issuing and operation of eNaira in Nigeria (“Presentation”). Naijmobile.com have highlighted the key elements of eNaira and its potential operations in Nigeria in this article.
What is the eNaira currency?
The Nigerian government will issue eNaira, a digital money having the same value as fiat naira (i.e. physical naira notes). It will be purchased by the general public through FI and transferred to users’ e-wallets. It’s comparable to the digital renminbi in China and the e-krona in Sweden.
What distinguishes eNaira from cryptocurrency?
Cryptocurrency is a decentralized kind of encrypted digital currency based on blockchain technology, whereas eNaira is a government-controlled digital currency whose value is set to be equal to the country’s official currency, making it more stable than cryptocurrency.
When will the Central Bank of Nigeria (CBN) introduce eNaira?
- The Central Bank of Nigeria (CBN) has announced that a trial scheme for the eNaira will begin on October 1st, 2021.
- It’s still unknown how the CBN will debut the new currency and who would have access to it immediately.
What are the advantages of eNaira over traditional digital banking?
eNaira is actual money earned and maintained by users in their e-wallets, unlike digital banking, which includes customers dealing with money held in a bank. As a result, customers will be able to transact with it like if it were fiat cash, without the need for intermediaries as in digital banking. The elimination of intermediaries is intended to lower transaction costs and time. Cross-border transactions are also likely to become simpler. It also allows unbanked Nigerians to transact in eNaira without having a private bank account.
Is the Nigerian currency eNaira the same as Bitcoin?
- No. Unlike Bitcoin, which is a cryptocurrency, the eNaira is a government-issued digital currency.This disparity has a significant impact on currency stability.
- The eNaira, for example, will keep the same value as the Naira. As a result, its value will not fluctuate as much as Bitcoin’s, indicating that it is not something you invest in with the hopes of making more.
In practice, how will eNaira work?
The CBN will supply eNaira (through their Stock Wallet) to intermediaries (licensed FIs) for onward distribution to individuals. As a result, FIs will keep a treasury wallet in order to receive eNaira from the CBN. eNaira transactions will take place on both new and current systems, including the Nigerian central switch, the Nigeria Inter-Bank Settlement System Plc (NIBSS).
The eNaira operating model will have four primary parties. I The CBN; (ii) licensed financial institutions (responsible for issuing eNaira to customers and monitoring digital transactions under their institution; and (iii) businesses and merchants (responsible for complying with CBN KYC regulations).