As part of its central bank digital currency project, the Central Bank of Nigeria (CBN) plans to start a digital naira pilot program in October 2021. (CBDC).
Nigeria’s Central Bank Is Planning To Launch A Digital Naira
Throughout much of 2021, the Central Bank of Nigeria (CBN) has been in the news for its anti-cryptocurrency activities. Despite this, the institution has intensified its research and investment in the underlying technology of cryptocurrency, blockchain, and has set a firm timetable for the launch of its blockchain-powered central bank digital currency pilot project (CBDC).
The CBN revealed the information to stakeholders during a webinar on Thursday (July 22, 2021). The Central Bank of Nigeria indicated that it would not be excluded from the ongoing CBDC activities around the world.
The “GIANT” digital currency initiative will employ the Hyperledger fabric blockchain, an enterprise-grade blockchain platform. Meanwhile, the central bank claims that the CBDC plan will make cross-border commerce easier while also allowing for macro-management and growth.
Remittances, monetary policy, financial inclusion, and tax collection would all benefit from the projected digital naira. Rakiya Mohammed, the bank’s information technology director, revealed that the CBN has been exploring the development and use of digital money since 2017.
The attempt by the Central Bank of Nigeria comes as countries all over the world have shown interest in digital assets and currencies.
This summer, the Bank of Ghana, like the CBN, is rapidly approaching the pilot stage for its own central bank digital currency. The government has risen to the top of the continent in CBDC development, claiming that central bank-issued digital currencies are preferable to and safer than decentralized cryptocurrencies.
The United Arab Emirates (UAE) intends to establish a CBDC as well. Vietnam, Israel, South Korea, Jamaica, New Zealand, Japan, France, and Singapore are among the other countries. Meanwhile, China (digital yuan), the Bahamas (sand dollar), and the Eastern Caribbean (DCash) are among the few countries to have created their own digital currencies.
Nigeria has previously banned cryptocurrency earlier this year.
The Central Bank of Nigeria (CBN) banned cryptocurrency transactions earlier this year, citing concerns that they could result in investment losses, money laundering, terrorism financing, illegal financial movements, and other criminal activity.
The bank stated in a press release intended to demonstrate the rationale for the restrictions:
“Cryptocurrencies have proven ideal for a variety of illicit activities, including money laundering, terrorism financing, small arms, and light weapon purchases, and tax evasion. Indeed, because of the detrimental impacts of widespread usage of cryptocurrencies for unlawful activities, many institutions and investors who place a great value on reputation have shied away from cryptocurrencies.”
Is the Central Bank’s decision to launch the digital naira a policy shift?