Nigeria will classify its upcoming central bank digital currency as “critical national infrastructure,” a new report has revealed. This, the country’s central bank believes, will allow for better protection from operational and cybersecurity risks.
Nigeria began exploring and researching the CBDC, which it has dubbed the e-Naira, five years ago under Project GIANT. As CoinGeek reported, the Central Bank of Nigeria is eyeing an October launch for the Hyperledger Fabric-based digital currency.
Now, a report by a local newspaper has revealed more details about the closely guarded project. THISDAY claimed to have obtained confidential documents on the CBDC which reveal, among other things, that the central bank intends for the CBDC to coexist alongside the traditional payment systems. The central bank has reportedly been working “to address interoperability risks that might be associated with the implementation.”
Nigeria’s central bank understands the risks of disruption that a CBDC poses, especially to digital payments systems. To address this, the bank will apply a suitable regulatory framework and other compliance mechanisms, the documents reportedly stated. Additionally, the bank believes that the long-term benefits to the financial system would offset the initial risks and costs.
For Nigerians, the benefits will be immense, the documents reportedly claim. They will benefit from a new range of banking services that will sprout from the CBDC’s integration with some of the existing systems. The e-Naira would also usher in new approaches to payments and introduce new banking and non-bank players in the financial system.
CBN will partner with the private sector to roll out the e-Naira in a two-tiered model. The bank would design and distribute the digital currency through regulated financial institutions. These institutions would be the ones to distribute the CBDC to the Nigerian public.
Yet another key discovery through the leaked documents is that the e-Naira will support offline payments. This has been a key consideration for central banks that are designing their own CBDCs as they seek an all-inclusive system. China and the Bahamas have already experimented with offline CBDC payments to varying degrees.
For the Nigerian financial institutions, the e-Naira will “lower the cost of operations and cash management as well as improve visibility and insight of transaction date for financial institutions.” These institutions will also benefit from new business opportunities that emerge from the use of the digital currency.
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