Digital Africa: Central Bank of Nigeria issues digital currency

Since Tuesday, Nigerians can register for the first time after a pilot phase for payments with “eNaira”, the new digital central bank currency (CBDC) of the country. The digital currency is to be made available to all citizens of the country as far as possible, while observing the usual duties of care and anti-money laundering measures, and also to enable access to banking services for those who have not previously had access to them. Nigerian citizens abroad who want to make transfers to their home countries should also be able to benefit from the fact that the system does not require any financial intermediaries and therefore hardly incurs fees for transactions. The system also enables social assistance to be paid out directly to recipients.In line with the country's digitization strategy, the introduction of the currency aims to promote growth and innovation.

The digital wallets, which are developed by the central bank and made available for private and business customers for use on smartphones, have maximum daily transaction volumes and capped account balances. Such measures are taken at CBDC to prevent massive withdrawals and conversions of bank money from conventional bank accounts and thus a collapse of the financial system. In addition to the wallets provided by the central bank, the eNaira can be integrated into their infrastructures by banks, payment service providers and fintechs via programming interfaces.

With the digitization of the naira, the Nigerian central bank is another such institution in an emerging country that issues a digital currency.

About a year earlier, the central bank of the Bahamas introduced its "sand dollar".

The National Bank of Cambodia followed shortly afterwards with its CBDC "Bakong".

By contrast, Ecuador had already created electronic central bank money in 2014.

However, this enjoyed little confidence in the country's dollarized monetary system.

Due to fewer users and high operating costs, the project was discontinued in 2018.

In addition, other central banks such as the European Central Bank or the Chinese People's Bank are examining and testing the introduction of a digital currency.