The CBN said it will launch a digital naira, e-naira on October 1
A Central Bank of Nigeria, CBN has said that it will issue a digital currency e-naira that will serve as cash within the country.
More so, the CBN will enable a digital wallet for the CBDC that will further promote cashless transactions in Nigeria.
This is generally deemed a necessary step in improving the Nigerian financial system which is chronically cash-based.
Cards and apps which are also part of the system allow for electronic payment. However, they involve various levels of networking to complete a payment transaction.
They also involve transaction fees that are infringing especially on small businesses as well as on customers who also have to pay parts of it.
Digitizing the naira to make money accessible on phone will help people and businesses circumvent slow and costly electronic payments.
With the e-naira, the CBN will provide digital wallets that run as computer codes.
People will be able to make purchases and transactions cost-free through their phones or debit cards.
Those without smartphones and unable to download the e-naira app can also use SMS.
A digital naira could help the 40 million unbanked Nigerians which CBN is trying to reach with its financial inclusion plans.
The Bahamas was the first country to release a digital currency. China is experimenting on a digital version of the Yuan.
More on the e-naira
The CBN digital currency, e-naira could effectively influence interest rates and monetary policy.
However, there are also concerns that commercial banking could go downhill with the introduction of the e-naira.
Integration of the e-naira system into the traditional banking system is being considered for maintaining a knowledge of the fundamentals of the economy.
This will further cut down the perceived risks of digital currencies.