Nigeria has finally announced the launch of its central bank digital currency (CBDC) named eNaira which has parity with the corresponding fiat currency and is expected to help in the economic growth of the country.
There have been several countries over the last few months, that have been working on the CBDCs with various countries in different stages of building out the solution. Some countries are still in discussion and research while others have gone ahead with conducting tests within the country and with other friendly countries as well. So, the fact that the CBDCs would be coming along within the next few years is something that cannot be denied but in what form or shape is what is something that needs to be decided by all involved. Nigeria was expected to launch the CBDC on October 1 but that plan had got delayed due to the time spent on annual celebrations of the country’s birth and it has been able to roll it out only now.
The government hopes that the eNaira would help to improve the reach of the financial services in the country and would help to bring many people, who are yet unserved by the banking or other financial services, onboard. The country also hopes that it would be able to carry out remittances in a fast and reliable manner and there have been claims that it would be able to generate billions of dollars in this manner. But how far this would be successful remains in question and many of the processes and procedures to be followed are yet to be set out by the government.
Like for example, there has been no clear definition of where it can be used and whether it is interchangeable with other cryptos. There has also been no clear indication on whether the digital currency can be changed into fiat and vice versa which is likely to be one of the key points as far as its usage by the mainstream population is concerned. Also, how it will be settled across borders with countries that do not use digital currencies is not very clear at this time and these are expected to be complicated items that the government and the Central Bank of Nigeria would need to resolve quickly before they can expect any kind of mainstream adoption of the eNaira.
