• Sat. May 21st, 2022

E-Naira: X-raying Nigeria’s First Digital Currency by Mujidah Yahaya

Mujidah Yahaya

FIRS

As Nigeria celebrates another year of independence and as with every celebration, further changes are expected and an example of change, which has been revealed to Nigerians, is the Central Bank Digital Currency (CBDC), the first digital currency of the country. Nigeria.

This digital currency known as E-Naira was first announced by the CBN following a cryptocurrency ban earlier this year by the Nigerian government.

E-Naira was created due to the increase in digital payment in the country which, coincidentally, results in less use of cash, resulting in the need to print less cash tickets.

Speaking at a seminar organized for the Committee of e-Business in Industry Heads Nigeria (CeBIH) before the launch of E-Naira, Rukiya Mohammed, CTO of CBN, said the need Nigeria’s digital currency arose out of the fact that digital payment came while cash payments were declining in Nigeria and around the world.

She further added that 85% of central banks around the world are considering digital currency and therefore CBN is also innovative in dealing with global trends.

“The CBDC would be legal tender with an e-Naira equivalent to one Naira, which shows fundamental differences between the CBDC and cryptocurrencies,” she said.

This latest statement shows that there is a clear difference between CBDCs and cryptocurrencies, as the E-Naira provides a platform for CBN to leverage blockchain technology to maintain a centralized role and institutional on money. This makes it possible to clearly distinguish Bitcoin, the world’s largest digital currency, and other cryptos that cannot be traced by a country’s central bank, making them difficult to regulate.

Most analysts have argued that over the past few years, trading in Bitcoin and other virtual currencies has become “widespread, disrupting the economic and financial order, giving rise to money laundering, collecting money. illegal funds, fraud, pyramid schemes and other illegal and criminal activities ”.

It is safe to say that the world as a whole is advancing rapidly in terms of technology and therefore this digital currency should come as no surprise to many. Around the world, many businesses and organizations would much prefer their customers not to use cash to make payments, although cash payments are not yet extinct, but they are statistically inferior to electronic and digital payments. . Before going any further, we need to understand what this digital currency is, namely “eNaira”.

ENaira is a digital currency which like all other digital currencies is any type of payment which will be purely electronic and any payment will be accounted for and transferred using computers and electronic wallets which unlike cash payments which require the need to have a banknotes available for loan to transact.

Some characteristics of this digital currency are that the currency is digital only and has no physical equivalent, the currency can be either centralized or decentralized, like decentralized cryptocurrencies and centralized fiat money. Digital currencies can also transfer value.

This “eNaira” is extremely beneficial in many ways, allowing users to transact more easily, across borders and faster at counters without having to wait to receive the balance unlike cash payments, digital currency does not. also cannot be soiled and does not require physical hardware. manufacturing, they can also facilitate the implementation of monetary and fiscal policies by the central bank. But as with everything good, there are downsides.

Nigeria as a country is still broadly classified as a developing country and this is mainly due to the overall state of life of the citizens. There is a major faction of the population that lives below the poverty line and cannot afford the basic necessities of life, this shows that the majority of the population is not financially inclusive and therefore is for the most part still accustomed to the traditional method of using money to make money. payments because the majority do not have access to a bank account.

As eNaira is launched due to the increase in electronic payments, what will happen to the part of people who cannot access a basic bank account, or who do not even have a simple understanding of how technology works. Is the eNaira meant to be used only by those who have the privilege of accessing the technology to hold this e-wallet or does the Central Bank have plans to make sure everyone is financially included.

While I firmly believe that CBN’s CBDC will be a game-changer that will offer an alternative payment system and radically transform the payments landscape, there is a need for the country’s banks to improve their game by being more technological as customers these days prefer. have the comfort of their fingertips that the new upcoming FINTECH banks offer these solutions, until these banks are able to be technologically innovative, meet the demands of their customers and fully support this new digital currency eNaira, as well as ensuring the country all citizens are financially inclusive, we ask the question.

ARE WE REALLY READY FOR A DIGITAL CURRENCY?

Mujidah Adedamola Yahaya is an MSC Financial Technology student at the University of the West of England – UWE Bristol. She can be reached on: [email protected]


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