CBN to launch National digital currency by October – Report

The Nigerian Apex bank with its stakeholders have outlined its digital currency initiative via a private webinar.

The Nigerian Central Bank Governor, Godwin Emefiele had earlier announced that the Apex bank will be working on a central bank digital currency during the 306th Banker’s Committee meeting.

The Central Bank of Nigeria (CBN) on Thursday, disclosed that its much-anticipated digital currency will be launched on October 1, as the country commemorates its 61st independence anniversary.

The press briefing delivered by the Director IT department, Rakiya Mohammed, at the end of the meeting further explained that the Bank had been conducting research in regards to central bank digital currencies since 2017 and may conduct a proof of concept before the end of this year.

The project name is tagged Project GIANT and it will use the Hyperledger Fabric Blockchain.

Nigeria’s central bank further revealed that the importance of eNaira includes Macro management and growth, cross border trade facilitation, financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

The Nigerian Apex Bank also underlined the benefits for the fintech ecosystem that include enhanced operational efficiency, opportunities for fintech start-ups in building services/products like financial inclusion that will contribute to the economic growth, and the creation of a new system complimenting the traditional payment system.

Cryptocurrencies are a new asset class evolving rapidly in an increasingly tech-driven economy. As a consequence, cryptocurrencies are subject to major volatility, which can change their value in a matter of seconds.

Bitcoin a highly volatile cryptocurrency

Bitcoin recovered from a one-month low and broke back above $30,000 on Wednesday July 21, suggesting firm support around that level even as the mood in broader financial markets remained fragile.

Bitcoin rose about 3% to $30,762 in the Asia session after it dropped to its lowest since June on Tuesday at $29,296. Bitcoin is worth less than half its April record high of $64,895.22. Ether rose 4% to $1,862.

Difference between Cryptocurrency and digital currency

Cryptocurrency is a sub-type of digital currency and a digital asset that relies on cryptography to chain together digital signatures of asset transfers, peer-to-peer networking and decentralization. In some cases a proof-of-work or proof-of-stake scheme is used to create and manage the currency.

Central bank-backed digital currencies, such as the potential digital Euro and digital yuan, may become a reality in the coming years. Unlike cryptocurrencies such as Bitcoin and Ethereum, these currencies promise less volatility and greater security. In addition, they will have the support of their respective monetary institutions, responsible for ensuring financial stability.

National security a major concern

Stablecoin is a digital currency that is linked to an underlying asset such as a national currency or a precious metal such as gold. Stablecoins are a type of cryptocurrency that are designed to maintain a fixed value, often pegged to a fiat (government-backed) security.

Since they are pegged to a more stable asset such as the U.S. dollar, stablecoins were created to manage price swings often seen in Bitcoin and other cryptocurrencies.

In the meantime, U.S Treasury Secretary Janet Yellen pushed top U.S. financial regulators to accelerate their consideration of new rules to police stablecoins, a type of cryptocurrency that’s seen rapid recent growth and remains largely unsupervised.

A statement says officials “discussed the rapid growth of stablecoins, potential uses of stablecoins as a means of payment and potential risks to end-users, the financial system and U.S national security.

In April 2020, electronic Chinese yuan (e-CNY) pilot programs launched in four cities. The digital currency’s debut was the culmination of a six-year journey that began when China’s central bank, the People’s Bank of China (PBOC), announced its research into a “Digital Currency/Electronic Payment” system in 2014.

The industrial revolution and with the birth of a new international monetary system that seeks to take over the world’s digital economy in the future,  It is only expected that economies of the world embrace the upcoming trend.