HOW DIGITAL CURRENCY WILL EASE TRANSACTION COST
Nigerians would begin to enjoy reduced cost of transaction and cash management as the Central Bank of Nigeria (CBN) is finalising plans to roll out its own digital currency before the end of the year, as it finds ways to regulate the virtual currency space in the country. CBN Director, Information Technology, Rukiyat Mohammed, announced this at the end of the virtual Bankers committee meeting held on Thursday.
The CBN had in February, placed restrictions on cryptocurrencies, directing banks not to use, hold, trade and/or transact in cryptocurrencies, citing risks in inability to regulate the highly volatile market. “Before the end of the year, the Central Bank will be making an announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency,” Mohammed explained.
She further explained that other digital currency like the Bitcoin and cryptocurrency are not under the control of the CBN, and that they are purely personal decisions which individuals make. “We have spent over two years studying this concept of central bank digital currency and yes, there are risks that we have identified and that is one of the reasons I said we are setting up a central governance structure that will involve all industry stakeholders to look at some of these risks even as we continue on our journey.
“Very soon, we will make an announcement as regards the date or if we will launch this, but yes, by the end of this year, we should be able to have something for the currency. On whether the other digital currencies will be used alongside the planned CBN digital currency, the director explained that “cryptocurrencies are not under the control of CBN. People are still transacting in cryptocurrency on their own and nobody has stopped them, but whether they will work alongside, these are some of the decisions that have to be taken as we progress into this journey.”
She said the Central Bank digital currency will complement the local currency and will be as good as one having cash in his pocket. She said the digital currency was being considered on the back of the present global demand, citing the remittances which is a huge market in Africa “we all know how long instructions take for money to be sent to or received from abroad.”
The digital currency she said would help the country to achieve the 80 percent financial inclusion target, which it missed in 2020. The currency will also help ease the process and cost of transaction, currency management, as well as complement CBN’s cashless policy. It would also enable innovation in the payment system in the country, enabling Nigerians to be able to transact more, online. When launched, the digital currency will be accessible to everybody just the way the local currency is accessible to everyone today, she said. “Just like everybody has access to cash, everybody can have access to the Central Bank digital currency,” she stated.
Mohammed said the CBN will, in a few weeks, make some definite announcements and would involve the banks. “We do have a very clear roadmap in the country and as I said, we’ve been exploring the various technology options, engaging various industry players and we are about to move to the next stage of a proof of concept after we will start the piloting. She said there are, however other considerations, like the architecture, accessibility, privacy, asset tokenisation, and ratification.