CBN releases guidelines to banks on e-Naira

The Central Bank of Nigeria (CBN), recently sent a presentation to Nigerian banks about the eNaira project, revealing more details about its design and operational module.

CBN Governor ,Godwin Emefiele, was in July  in Abuja  at the end of the bi-monthly Monetary Policy Committee (MPC) meeting, quoted  as saying : “Our digital currency which is tagged eNaira will certainly come into operation in October and we are working very hard for this.

“We believe transactions will be cheaper and more efficient as there will be less conflict.”

He said the economy is going digital and “cash cannot play in that space,” adding that “e-Naira which will represent the digital equivalent of cash will be used as fiat currency for transactions”.

On how the e-Naira will work, Emefiele said: “If you choose to convert some of the naira in your account to e-wallet or digital currency, we will support that.

“When this starts the CBN will move some of the balances in CBN to those banks into digital currency. You go to your bank, you decide to move N2 million from the N10 million you have in your account to digital currency they will debit your account and move it into your e-wallet.

“Then you have N2 million digital currency which you can spend across countries”.

Report by  Nairametrics  made a  vivid presentation  describing  how the new currency would be designed and operated.

According  to the Nairamatrics report,  the e-Naira is a legal tender for the entire country. The report also mentions that it will have non-interest-bearing CBDC status, a transaction limit for customers, and a value-based transaction limit.

Participants in the e-Naira programme are featured in five stages, including:

Monetary Authority Suite; The Central Bank will be handing the first product component that include Issue, distribute, redeem and destroy the currency. Store data on a cloud server, monitor and analyse currency transactions.

Financial institution Suite; licensed financial institution will be able to request currency or issue stablecoins, manage digital currency across branches, KYC, identify and AML compliance capability

eGovernment Suite; the government will be able to efficiently process digital payments sent to and received from citizens and businesses

Merchants will provide low-cost payment and business management software, POS, remote payment solutions, online capabilities, transaction analysis and reconciliation.

Retail Consumer Suite; features user-centred designs for a great user experience. The architecture will be expandable to enable innovation; features advanced privacy and security.

Consequently, the proposed transaction cost for the e-Naira wallet was also outlined by the Nigerian Central Bank

The digital currency infrastructure does not charge for user-to-merchant transactions and P2P wallet transactions.

It shall be the responsibility of Nigerian banks to promote and market the centrally issued digital currency as a cash alternative to existing and potential customers in support of the Nigerian apex bank’s goal for financial inclusion.

In order to catalyse the adoption of the e-naira, banks will facilitate onboarding and provide world-class customer service

Nigerian banks will be allowed to invite all their customers to register for the e-Naira. Besides pre-generated codes, the banks can send invitation codes for onboarding to a specific list of selected customers. Onboarding will be done for customers who have a code assigned by their banks. The banks have already validated and verified these customers.

Moreover, the CBNstated the wallet provided by its institution was merely a stop-gap measure for meeting the deadline, given that banks and other licensed operators may provide their own wallets since it didn’t intend to compete against the banks.

As part of the digital currency initiative, Nigeria’s central bank has made clear that NIBSS and other switching platforms will still be relevant, existing infrastructure can be integrated and leveraged in the e-Naira implementation.

As a national critical infrastructure, the e-Naira system will be subject to comprehensive security checks, all data and personally identifiable information (PII) will be kept off the ledger and will not be stored on the ledger.

The CBN governor had in July  noted that “the use of cash is declining all over the world,” noting that “with the advent of digital currency, more and more people are adopting the use of electronic money to facilitate little commerce”.

He said cryptocurrencies are private monies that are not regulated, therefore using them is a personal decision.

“if you decide to use them, it means you are taking your risk. If you make your money, we will wish you good luck but if you lose your money, we will laugh at you,” he said.