What you need to know about CBN's digital currency(eNaira)
Posted by Ahmed Iyanda | 3 years ago | 2,171 times
The Central Bank of Nigeria (CBN) announced in June that it will launch its digital currency by the end of 2021. However, Nigeria has become the latest country to launch a digital currency as residents will be able to make payments using the eNaira from tomorrow.
E-Naira is a Central Bank of Nigeria-issued digital currency that provides a unique form of money denominated in Naira. eNaira serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments. eNaira has an exclusive operational structure that is both remarkable and nothing like other forms of central bank money.
Below are some things you should know about Nigeria's e-naira
It is a digital storage that holds the eNaira. It is held and managed on a distributed ledger.
It can be used for remittance which includes cheaper diaspora remittance option.
It is traceable, hence, fraudulent activities can be traced.
It can be used for both international and local trade.
It has a unique identity and security structure
It is exchanged peer to peer.
It is universal – anybody can hold it.
It does not yield any interest.
Payments can be made by scanning QR codes.
You can monitor your e-wallet activities.
How will the eNaira work?
The eNaira will work as a digital version of the physical currency(Naira).
The eNaira wallet is similar to a bank account and is created in the same way; however, it will be a separate account that is not connected to an already existing bank account.
Also, transactions will be possible between parties that have an eNaira wallet, which allows you to store, send, and receive eNaira.
However, e-naira comes with some benefits. According to CBN, the benefits include 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. Other benefits are the reduction in the costs of minting and printing physical currency, a reduction in fraudulent activities, counterfeit money in circulation and armed robbery.
Despite its advantages and its benefits to Nigerians, CBN didnt mention the disadvantages of this new development, the reality is that the proposed digital currency cannot be devoid of problems. Some obvious disadvantages are that a significant number of Nigerians are not adept in the use of technology and most importantly, there would likely be unrestrained monitoring of the transactions of Nigerians.
