The Central Bank of Nigeria (CBN) has said its new proposed Central Bank Digital Currency (CBDC) called eNaira should be handled as a critical national infrastructure launched to protect the nation against operational and cyber-security risks.
The central bank stated this in its latest report titled “CBN Update Vol.3, No. 8 of August 2021” released on Monday, October 11, 2021.
In the report, the apex bank said it was introducing regulatory and compliance mechanisms to prevent disruptive competition for electronic money. Also, stated was that the e-Naira would co-exist with the traditional payments system while the CBDC is to address interoperability risks that might be associated with the implementation.
CBDC would, among other things, usher in ways of payment and create new players in the financial system, the report added. Mentioned in the statement was that the medium to long-term pay-off increased efficiency of operations which was expected to offset initial outlay, adding that the introduction of limits on the e-Naira holdings would mitigate risks of disintermediation.
The two-tiered model for CBDC, the report stated, was to facilitate a public-private partnership arrangement whereby, the Bank would design the eNaira and distribute it through regulated financial institutions, where digital cash to individuals and businesses would be provided. Individuals and businesses would be able to make transfers real time and offline through all payment channels to other individuals and businesses.
The Bank further stated that the e-Naira would provide lower cost of operations and cash management in addition to improved visibility and insight of transaction data for financial institutions. It would also improve opportunities in the financial system, creating new business opportunities from emerging business models, financial products, and services.
