Central Bank Of Nigeria To Launch Its Digital Currency This Year

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According to the Director of Information and Technology of Nigeria, the country’s Central Bank is preparing a digital currency pilot that could be launched as early as the end of this year.

The information was given during an online news briefing a few days ago. The director, Rakiya Mohammed, revealed  the project had been underway for two years. She also confirmed the likelihood of more announcements following this one in the coming weeks.

Before the end of the year, the Central Bank will be making [a] special announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace,” Mohammed was quoted in Today, a local news outlet.

CBN’s Previous Stand On Digital Currency

In February, the CBN released a newsletter declaring that local banks and other financial institutions were prohibited from dealing in cryptocurrencies or facilitating payments for crypto exchanges. They were also given instructions to identify and shut down all accounts owned by individuals or firms that were tied to crypto platforms.

The decision to suppress the use of digital currency was attributed to massive growth in the number of monthly cryptocurrency transfers that were made to and from Africa, which prompted concerns about the anonymity of cryptocurrencies and its lack of KYC principles. 

CBN governor Godwin Emefiele claimed that the use of digital currencies by unregulated entities went against an existing law as well as against the CBN’s mandate.

Cryptocurrency is not legitimate money because it is not created or backed by any Central Bank,” CBN governor, Godwin Emefiele said following the nationwide crypto ban. “Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system.”

He, however, stressed that the CBN’s stance was to educate Nigerians about the cryptocurrency space, and to ensure  more informed financial choices were made. 

Plans For Nigeria’s Proposed CBDC

During a virtual briefing with bankers on June 10, Rukiya Mohammed said the Nigerian government was aware of the plans of “80 percent” of national banks across the world to launch native crypto tokens, and have no plans to be left behind.

If you have a Central Bank digital currency that is backed by the government, then people can make transactions online without fear of any default,” Mohammed said.

Nigeria’s planned adoption of a national cryptocurrency is believed to be capable of  expanding digital inclusion, and making remittances from the diaspora easier, therefore allowing for smooth international transactions.

Prior to the ban, Nigeria was the second largest Bitcoin market in the world right after the US, trading nearly $600 million in Bitcoin in the last five years. Commanding one of the biggest presence in the world’s crypto market, Nigeria enters into a uncertain period of regulations and government skepticism. The government’s planned adoption, however, is a positive step towards the acceptance of cryptocurrencies in the country.

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