CBN radical departure from initial posture considers eNaira launch October

CBN vs Cryptocurrency

There are key expectations for the eNaira currency to be launched by the Central Bank of Nigeria (CBN) this October especially as the Nigerian cryptocurrency market has had several tell tales of recent.

In February, the apex bank issued a circular to commercial banks, warning them of the risks of accepting cryptos as the virtual currency was not yet insured or regulated by CBN in Nigeria. With this advisory, there were reported halts in transactions by banks with lots of crypto-based virtual marketing platforms experiencing a glut.

However, in what appears to be the most radical departure from the initial posture of staying away from the digital currency space, CBN recently announced that it will launch the pilot scheme of its digital currency on October 1.

The apex bank’s Director of IT, Rakiya Mohammed, during a webinar, disclosed that the bank had been conducting research on its digital currency since 2017 and might conduct a proof of concept before the end of the year.

Mohammed further disclosed that the project, tagged “Project GIANT” would use the Hyperledger Fabric Blockchain.

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Prior to this announcement, the CBN Governor, Godwin Emefiele, announced that the bank would be working on a digital currency during the 306th Banker’s Committee meeting.

CBN 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.

Prior to this bold move, the CBN expressed worry about illicit flows of cash and the seeming ability of cryptocurrencies to travel in and out of Nigeria unannounced and untaxed.

Newsmen also found that India, like Nigeria, wants to pass the “Cryptocurrency and Regulation of Official Digital Currency Bill” to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.”

The European Central Bank (ECB) President, Christine Lagarde, is leading the campaign for a digital Euro but does not see the flagship crypto, Bitcoin, and other cryptos as ideal for payment.

In the United States, JP Morgan Chase, the largest bank in February 2019 trialed ‘JPMCoin’, based on blockchain tech. the gain of this to Nigeria is that the country which already keeps crude oil proceeds in the JP Morgan/NNPC/CBN account can use the ‘JPMCoin’to request daily remittance of sales proceeds and receive them instantaneously, at no cost, no delay, no fee, according to the records.

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Financial analysts have also thrown their weight behind this move. Economist and founding partner of Biodun Adedipe Associates, Dr. Biodun Adedipe, told newsmen that, “I told the CBN in a recent engagement that the way to go is to encourage that, because behind crypto is blockchain technology, and there is a whole lot it does beyond crypto.

“If you want to encourage investment in that sector, you better encourage crypto also, but set the standard and think about creating the eNaira. I gave them the idea of creating the eNaira.

“Once they set a framework for banks and anyone that will participate in that space, they would be setting the pace and not playing catch up.”

On his part, a financial technology expert, Kalu Aja said, if CBN deploys the eNaira, it would give birth to a crypto clearinghouse and facilitate instant international transfers between local and international banks, as well as boost remittances.

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“There will be no need to wire money or hire a department to verify and track payments. Nigerian airlines for instance can send dollars to service their planes and CBN can create an exporters window where instant remittance of export proceeds can flow back in a cryptocurrency.”

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By Comr Amos Kalu

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