Nigeria’s regulatory bank, the Central Bank of Nigeria (CBN), earlier this week hinted at its plans to create a digital Naira.
Godwin Emefiele, the nation’s CBN Governor, made this disclosure at a Monetary Policy meeting held in Abuja, the nation’s capital. The CBN Governor also took the opportunity to address recent trends of increasing volatility and declining value in the cryptocurrency market, taking a jab at the recent fluctuations that have rocked the market as a result of Tesla CEO Elon Musk’s changing predilections. Godwin was quoted as saying:
“We have seen the collapse of the market. Initially, when Elon Musk tweeted around the time we said our banking and payment facilities were no longer available for cryptocurrency transactions and he tweeted that he would invest $1.5B and the (Bitcoin) price went up. He now tweeted and raised some concerns and the (Cryptocurrency) thing took a dive.”
The CBN’s latest intention comes as a mild shock. In early February, Nigerians woke up to a red alert warning about cryptocurrency trading within the country, followed by a total ban on all cryptocurrency-related transactions with local banks in the country, forcing tens of millions of Nigerians to seek other indirect cryptocurrency trading channels, such as P2P.
Prior to the ban, Nigeria ranked third on the list of countries with the highest volume of transactions, with over $400 million worth of trade in 2020.
Despite the ban, Nigerians have continued to show unwavering interest in all forms of digital assets, using them for both daily trade and as a means of asset storage, as inflation, rising taxes, untimely devaluation, and foreign debt continue to batter the local naira into losing relevance, both locally and internationally.
What will Digital Naira look like?
It is not clear how the CBN plans to execute the digital naira project. A project of that magnitude will also require top indigenous cryptographic experts, and the federal government has already undermined most of them by banging the hammer on their infantile innovations around the nation’s crypto space.
Will the CBN take a cue from the next US CBDC? Will it run to China (as it did for loans and trade deals) to learn about its digital Yuan? The future will eventually unfold the plans that exist.
