Nigeria’s central bank has sent a presentation about the e-Naira project to all Nigerian banks, issuing preliminary guidelines for the proposed digital currency. The presentation to the banks reveals more about the design and operational module of the currency.
Additionally, the presentation also describes how the new currency is designed and operated. The report also describes the e-Naira as legal tender and mentions that its status will be that of a non-interest-bearing CBDC.
Project Giant
The CBDC, also dubbed Project Giant, will have its value pegged to the Naira, ensuring that the e-Naira will offer the same value as the Naira without being an interest-bearing currency. The e-Naira will function alongside Nigeria’s fiat currency, with Nigeria’s central bank responsible for issuing, redeeming, and distributing the digital currency and monitoring other functions related to the management of the e-Naira.
A Tiered Operating Structure
The e-Naira will operate using a tiered Anti-Money Laundering (AML) and Know Your Customer (KYC) structure, with each tier having different transaction limits. The base tier will cater primarily to unbanked citizens. The unbanked citizens will be required to provide their phone numbers which have been linked to their national identity. Once verified, citizens will have a daily transaction limit of ₦50,000.
Citizens who have bank accounts will be accommodated in the second and third tiers. Which tier they get put into will depend on the number of KYC and AML steps that they have completed. The daily transaction limit for the second tier will be ₦200,000 and ₦1 Million, respectively. Access to the third tier will be granted after citizens complete a physical verification for the KYC and AML regulations.
Nigeria’s central bank is also working to ensure the smooth transfer of funds between bank accounts and e-Naira wallets. The transfers will not involve fees as an incentive to increase the adoption of the CBDC. The central bank will also promote the e-Naira as an alternative to cash to push towards the apex bank’s goal of financial inclusion.
The Onboarding Process
Banks based in Nigeria can invite their customers to register for the e-Naira CBDC. The onboarding process will feature pre-generated codes, while the banks can also send invite codes to select customers. Customers who already have a code assigned by their banks will be onboarded first since the bank will have already verified these.
Several Countries Looking At CBDC’s
Nigeria’s central bank hopes to roll out its CBDC by the end of the year, while elsewhere in Africa, Ghana is also looking to implement its own CBDC in its quest to improve its financial services and the overall economy. Ukraine has also passed a resolution to treat CBDCs as fiat currencies, while India is looking to begin its CBDC trials by the end of the year.
Bitt Inc to Help CBN Develop Its CBDC
The Central Bank of Nigeria has also announced that it has engaged with Bitt Inc, a global fintech company, to help develop the CBDC. The engagement was revealed by the governor of the CBN, Godwin Emefiele, who had earlier listed out several benefits of CBDCs such as financial inclusion, cross-border trade, cheaper and quicker remittance, among other things. The CBN released a statement about the digitization of the Naira, stating,
“Given the significant explosion in the use of digital payments and the rise in the digital economy, the CBN’s decision follows an unmistakable global trend in which over 85 percent of central banks are now considering adopting digital currencies in their countries.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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