The Central Bank of Nigeria (CBN) has revealed intentions to launch its first digital currency, the eNaira. The currency serves as both a medium of exchange and a store of value. It claims to offer better payment prospects in retail transactions when compared to cash payments.
As cryptocurrencies such as Bitcoin have grown in popularity, governments in different countries worldwide have begun to explore creating their digital currencies. Nigeria isn’t any different.
What is eNaira?
eNaira is a digital currency created by the Central Bank of Nigeria that provides a unique form of money denominated in Naira. When opposed to cash payment, the new digital currency acts as both a means of exchange and a store of value, providing improved payment prospects in retail transactions.
Moreover, the new digital currency has a unique operational structure that sets it apart from other Central Bank money.
Consequently, the new currency will serve as a digital version of the actual Naira rather than replacing it.
When Will The CBN Launch the eNaira?
On October 1st, 2021, the CBN will begin a pilot program for the eNaira.
It’s still unknown how the CBN would go about launching the new currency and who will use it right away.
The eNaira app will also be launched on October 1st, 2021.
What Will This Digital currency Be Used For?
The new digital currency will function as a digital replica of the Nigerian currency.
ID verification, eNaira payment processing, and the creation of wallets for clients to store their digital Naira will be the responsibility of financial institutions regulated by the CBN.
The eNaira wallet works in the same way as a bank account and is formed in the same way; however, it will be a separate account not linked to an existing bank account.
Additionally, transactions will be possible between two people who have downloaded and installed the eNaira wallet, which lets you store, transfer, and receive digital currency in Naira.
Is eNaira Similar To Bitcoin?
No. It is a government-issued digital currency, unlike Bitcoin, which is a cryptocurrency.
This contrast has a significant influence on the currency’s stability.
This digital currency, for example, will have the same value as the Naira. As a result, its value will not fluctuate as much as Bitcoin’s, indicating that it is not a good place to store your money to grow.
However, the new digital currency makes it easier to conduct digital transactions without physical currency.
What Impact Will This New Digital Currency Have On Nigeria’s Economy?
It’s yet unknown what impact the new digital currency will have on the Nigerian economy.
However, the CBN thinks that, amongst other things, the new digital currency would substantially increase financial inclusion, payment processing, and tax collection.
Cross-border commerce is projected to rise due to the eNaira, which might benefit the Nigerian economy.
What Impact Will This Digital Currency Have On Money Transfers To Nigeria?
It’s still unclear how the new digital currency will handle cross-border transactions.
This is still an important question for many experts ahead of the launch of the CBN’s eNaira pilot scheme.
One thing is clear, though; the new digital currency will not replace the physical Naira. As a result, you can still send money to Nigeria, as always.
Frequently Asked Questions
What Makes eNaira Different From The Money On My Bank Account?
eNaira is the digital form of cash and is a direct liability on the Central Bank of Nigeria, while the customer deposits are direct liabilities on the financial institutions.
Is eNaira Wallet Safe?
Yes. The new digital system uses a two-factor authentication system and cryptographic encryption to ensure the safety of customers’ wallets and the eNaira holding.
To know more about the eNaira, visit this link.
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