Nigeria is going to become the first country in Africa and probably the largest country so far, in terms of population, to launch the central bank digital currency.
The release is scheduled for October 1 but the website for the same has been rolled out already by the Central Bank of Nigeria. The users will also be given a CBN-approved wallet for them to store the eNaira and also transact through the same. CBDCs have become the pet project of many of the central banks of many countries as they want to keep abreast of the digital age that has set in and they also view it as a countermeasure to combat the spread of cryptocurrencies.
The CBDCs, as it is launched by the respective central banks, can be tracked and regulated by the central banks but the same cannot be done very easily as far as other cryptos are concerned which is why the central banks view the introduction of the CBDCs as a measure that balances the digital onslaught but at the same time, keeps away the cryptocurrencies. In countries like Nigeria, the regulators and the central bank have had a tough time in controlling the flow of cryptocurrencies and they had to ban all crypto transactions and related businesses done through the banks to bring in a semblance of control.
The jury is still out on whether the CBDCs issued by the central banks would make any difference to the financial ecosystem and the control exercised by the banks over the users’ financial transactions but the fact that it would increase financial inclusion is something that cannot be denied. CBDCs would not be introduced with a profit motive and so the advantages surrounding a digital currency that is not built with a profit purpose is something that normal cryptocurrencies would not be able to match.
It is also likely to help with international remittances though the details of how each country, some with CBDCs and some without them, would be able to transact with each other remains a question mark at this point. The digital wallet provided by the CBN to store the eNaira would be linked to the bank account of the user which is likely to make the transfers between the wallet and the account easy, secure, and fast as well.