Central Bank of Nigeria (CBN) working on Its CBDC Plan, Will Launch e-Naira Wallet

The Central Bank of Nigeria (CBN), on August 30, has announced the confirmation that it's working on its CBDC plan and will launch its e-naira wallet for digital currency by October 1, 2021. 

It will have a legal tender and non-interest-bearing asset status. The detailed presentation of the e-Naira project mentioned that it would have a transaction limit maximum of 50,000 Naira for non-account holders.

CBN will roll out the e-Naira program in five stages and will be responsible for the first part of the execution. The first stage is known as the 'Monetary Authority Suite.' This includes issuing, distributing, redeeming, and destroying the currency. It will also store data on a cloud server simultaneously monitor and analyze currency transactions.

The second stage, aka 'Financial Institution Suite,' will make sure that "licensed financial institutions will request currency or issue stablecoins, manage digital currency across branches, KYC, identify, and AML compliance capability.

'E-Government Suite' is the third stage, which involves the Nigerian government. Where it can "process digital payments sent to and received from citizens and businesses." 

In the fourth stage of the five-stage process, merchants are expected to provide "low-cost payment and business management software, POS, remote payment solutions, online capabilities, transaction analysis, and reconciliation."

'Retail Consumer Suite' is the final stage that features "user-centered designs for a great user experience." The architecture is believed to be "expandable to enable innovation; features advanced privacy and security."

To support CBN's goal for financial inclusion, it will be the responsibility of Nigerian banks to promote and market the CBDC. This goal will be achieved by providing e-Naira as an alternative to cash to their existing and potential clients. The digital currency infrastructure does not charge for user-to-merchant transactions and peer-to-peer wallet transactions.

To accelerate and promote the adoption of e-naira, banks will facilitate onboarding and provide world-class customer service. The banks will be permitted to invite all their customers to register for the e-Naira.

Moreover, with pre-generated codes, the financial institutions can send invitation codes for onboarding to a definite list of chosen customers who are already validated and verified. The catch for onboarding is, it will only be allowed for clients who already have a code assigned by their banks. 

Furthermore, the Central Bank asserted it does not intend to compete against the banks; hence the initial wallets provided are only a means to meet the deadline.

In acknowledgment of the worldwide growth of digital payment solutions, central banks worldwide are striving to create their own central bank digital currencies. While the United States Federal Reserve Bank is on track to release its Digital Dollar report in early September, China is gradually creating a global clearing network for mobile payments to be settled in the Digital Yuan.