Nigeria's central bank outlawed banks and financial organisations from dealing or operating in cryptocurrencies earlier this month, claiming that they presented a risk to the financial system.
Nigeria's Central Bank has joined a growing number of emerging nations that are betting on digital money to reduce transaction costs and increase participation in the formal financial system.
In a televised statement during the introduction in Abuja, the capital, President Muhammadu Buhari said, "Nigeria has become the first country in Africa, and one of the first in the world, to introduce a digital currency to her inhabitants." "Over the next ten years, the adoption of the central bank digital currency and its underlying technology, blockchain, can boost Nigeria's gross domestic product by $29 billion."
The International Monetary Fund projects GDP for Africa's largest economy would have a GDP of $480 billion in 2021.
The launch of the digital currency, known as the eNaira, comes after the central bank banned banks and financial institutions from dealing or operating in cryptocurrencies in February, alleging that they posed a risk to the financial system.
The eNaira portal has received more than 2.5 million daily visits since its inception, with 33 banks connected on the platform, 500 million c ($1.2 million) successfully minted, and more than 2,000 customers onboarded, according to central bank Governor Godwin Emefiele.
CBDCs, or central bank digital currencies, are national currencies, as opposed to its crypto equivalents, such as Bitcoin and Ethereum, which are appreciated in part because they aren't tethered to fiat money. The eNaira will be used to supplement the physical naira, which has lost 5.7 percent this year despite the central bank's efforts to keep it stable.
Emefiele remarked, "The eNaira and the physical naira will have the same value and will always convert to one naira for one eNaira."
The digital currency will increase cross-border trade and financial inclusion, improve transaction efficiency, and improve monetary policy, according to the central bank.
CBDCs can boost economic growth, improve remittances, improve financial inclusion, and improve the efficiency of monetary policy by combining digital technologies with better economic activity, according to Buhari. He also stated that digital money can "help shift many more people and enterprises from the informal to the official sector, thereby enhancing the country's tax base."
Bitt Inc. was selected as a technical partner by the Central Bank of Nigeria in August to assist in the creation of the currency, which was set to debut on October 1st.
Nigeria joins the Bahamas and the Central Bank of the Eastern Caribbean as one of the first countries in the world to introduce national digital currencies. This year, China debuted a trial version of its "digital renminbi." From Ghana to South Africa, countries are experimenting with digital versions of legal tender to enable for faster and cheaper money transactions while maintaining control over their monetary systems.
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