Central banks across the globe are rethinking their position on digital currencies, such as Bitcoin, Ethereum, and a host of others. Perhaps one reason is that these emerging forms of payment pose a threat to traditional money as their popularity soars.
Whatever the case is, central banks have begun to incorporate the new digital currency technology into their current systems to maintain control.
A Central Bank Digital Currency (CBDC), as the name implies, is a digital form of currency that may replace banknotes.
In keeping with the action of its international counterparts, the Central Bank of Nigeria (CBN) has disclosed that plans are underway to launch its digital currency before the end of 2021.
Giving the disclosure at a virtual briefing of the Bankers’ Committee on Thursday, the Director of Information Technology (IT) of the CBN, Rukayat Mohammed, announced that the CBN had been exploring a possible CBDC for over two years.
“Very soon we would make an announcement on the date for the launch and by the end of the year, we should have the digital currency. We would possibly launch a pilot scheme in order to provide this kind of currency to the populace”, she said.
While this is an interesting turn of events, you may recall that the CBN directed all local banks to close accounts and desist from crypto transactions on account of the decentralized nature of cryptocurrencies.
However, the CBN governor, Godwin Emefiele later claimed that the bank had never banned cryptocurrency activity in the country.
According to Mohammed, about 80 percent of central banks in the world are exploring the possibility of issuing the central bank’s digital currency and Nigeria cannot be left behind.
As indicated by the CBN director, the CBDC would complement cash as well as make it easier to transfer remittances into the country. “We all know how money has to travel for someone to send money from Nigeria to abroad and it is a huge money in Africa,” she said.
Having studied the architecture, accessibility, and privacy issues of a digital currency, Mohammed revealed that the Central Bank of Nigeria is set to explore different technology options, engage various industry players and test the digital currency.
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