Nigeria’s central bank has issued draft guidelines for its central bank digital currency (CBDC), the e-naira. In documents seen by local media, the bank revealed that the CBDC will have legal tender status, with commercial banks being charged with the distribution and marketing.
Dubbed Project Giant, the CBDC project in the West African nation has been ongoing for about five years, but only seemed to pick up pace in the past 12 months. In its latest move, the Central Bank of Nigeria (CBN) has now sent the draft guidelines to local banks and revealed more details about what could become one of Africa’s first CBDCs.
As per local outlet Nairametrics, which reportedly saw the draft guidelines, the e-naira will be legal tender for the entire country. It will also have non-interest-bearing status, with a transaction limit set for its users.
CBN will issue, distribute, redeem, and destroy the e-naira, according to the draft guidelines. It will also store all transaction data as well as monitor and analyze all transactions. The commercial banks will issue the digital currency to users and be charged with ensuring all transactions are subject to strict KYC and AML compliance.
Merchants in Nigeria will be required to accept the e-naira as an alternative to cash, enabling such features as remote payment solutions and online capabilities, Nairametrics reports.
The apex bank intends on launching a digital wallet for the CBDC. However, this will be a stop-gap measure to allow the banks time to build their own wallets, with the CBN noting that it’s not seeking to compete with commercial banks.
The central bank also made it clear that all existing payment systems will still have a place in a post-CBDC world. E-naira can easily be integrated into these systems, making them more efficient. These include the Nigerian Inter-Bank Settlement System (NIBSS), a platform that’s jointly owned by all Nigerian banks and serves to ease payments among them.
Nigeria is very keen on the CBDC and as CoinGeek reported, it’s set to classify the e-naira as ‘critical national infrastructure,’ allowing for better protection from operation and security risks.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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