The new stablecoin cNGN is being developed by a consortium of Nigerian banks, fintechs, and blockchain businesses and will be consistent with the regulations set by the stakeholders and controlled Naira stablecoin.
The Nigerian Naira would be pegged 1:1 to cNGN, but unlike previous stablecoin drafts, it will be owned by Nigerian banks and will be legal money.
According to Forbes, the debut is scheduled for 2024.
cNGN, however, will be a cryptocurrency, like other stablecoins, rather than a digital money, as in prior versions.
This comes after the Central Bank of Nigeria lifted the prohibition on cryptocurrency transactions last week.
The coin will be serviced by the consortium and owned by its banks.
In February 2021, the central bank, led by Mr Godwin Emefiele, forbade credit institutions from doing cryptocurrency-related activities. Many bitcoin firms were affected, forcing them to revise their product offers.
The lifting of the restriction stems from the realization that cryptocurrencies play a significant role in global financial systems, and its use in Nigeria, which is one of the currency’s fastest users, is unavoidable.
Nigeria has already attempted to switch to a digital currency on multiple occasions. Nigeria implemented its cashless policy in 2012, with the intention of making its payment system more efficient, lowering the cost of banking services, and improving the effectiveness of monetary policy.
The Muhammadu Buhari administration established the eNaira Central Bank Digital Currency in October 2021.
However, the eNaira’s acceptance rate has been poor since its launch on October 25, 2021.
The coin was marketed as a way to lessen Nigerians’ reliance on fiat currency and cash, as well as to bring many more into the country’s financial inclusion agenda, as roughly 40 million individuals do not have a bank account.
The CBN has struggled to convince citizens to use CBDC, launching several campaigns but the digital currency has attracted only one in 200 citizens.