Nigeria Joins China, Brazil, and Others in the Race for National Cryptocurrencies

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The Central Bank of Nigeria is looking to launch its own central bank digital currency (CBDC) by the end of the year. Rakiya Mohammed, an information technology (IT) specialist at the Central Bank of Nigeria (CBN), disclosed that the bank has been exploring the concept of a central bank digital currency (CBDC) for the last two years and a ‘special announcement’ shall come soon.

Details on the E-Currency

‘Before the end of the year, the Central Bank will be making a special announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace,’ Rakiya Mohammed, an information technology (IT) specialist at the Central Bank of Nigeria (CBN), announced during a news briefing.

Nigeria initially tried to clamp down on cryptocurrencies at the beginning of 2021 and barred commercial banks and other financial institutions from servicing crypto exchanges. While the information revealed is vague, Mohammed’s announcement confirms that Nigerian authorities are actively considering CBDC as a viable alternative and intend to pursue it as soon as possible.

The CBN’s digital currency will act complementary to naira cash notes, Nigeria’s local currency. Authorities are currently brainstorming the architecture, accessibility and privacy concerns of the system. The initial roll-out shall be a pilot program, similar to what China’s been trying with e-Yuan — also known as just digital Yuan.

Race to Launch National Cryptocurrencies

The cryptocurrency world is undergoing a period of rapid progression as governments and companies globally grapple with how they can leverage the technology for maximum returns. The G7, for instance, stated that it’s working on a common set of CBDC principles for central banks to issue their own digital currency. The European Central Bank (ECB) has highlighted that countries that choose not to launch a CBDC could be left out of the loop when it comes to cross border payments.

Brazil, like Nigeria, is working on its own CBDC that will work as an extension of the physical currency that already exists. El Salvador became the first country last week to accept Bitcoin as legal tender alongside the US dollar. However, a CBDC offers more control to the central bank and adds sovereign value, eliminating the high volatility that has plagued cryptocurrencies since their debut.