CBN to handle Digital Currency as Critical National Infrastructure

10 Aug CBN to handle Digital Currency as Critical National Infrastructure

The Central Bank of Nigeria (CBN) has said its proposed digital currency, known as e-Naira, will be treated as a critical national infrastructure to protect it from operational and cyber-security risks.

In a document which offered more insights into the digital money regime, especially the potential risks and mitigation measures, the apex bank said there would be a co-existence of traditional payment systems and the CBN Digital Currency (CBDC) to address interoperability risks that might be associated with the implementation.

CBN said it would apply regulatory framework and compliance mechanisms to prevent disruptive competition for the electronic money.

According to the document, the introduction of the CBDC would, among other things, usher in new approaches to payment as well as bring about new bank and non- bank players in the financial system.

The digital currency regime would also introduce a new range of banking services and integration with new systems, providing new possibilities for the payment architecture.

The bank says the two-tiered model for CBDC would facilitate a public-private partnership arrangement whereby the CBN would design the e-Naira and distribute through regulated financial institutions, while the latter would in turn provide the digital cash to individuals and businesses.

Essentially, under the e-Naira regime, individuals and businesses would be able to transfer value in real time through existing and future payment channels. People would also be able to transfer value in real time while offline to other persons and businesses.

With the e-Naira, the bank says, it hopes to lower the cost of operations and cash management as well as improve visibility and insight of transaction date for financial institutions. It would also improve opportunities in the financial system, creating new business opportunities from emerging business models, financial products, and services.

CBN Governor, Godwin Emefiele had during the recent Monetary Policy Committee (MPC) meeting provided additional clarification on the e-Naira project. Emefiele said if “you have some naira in your account and you choose to convert part of your naira into a digital wallet by way of a digital currency, we will support that.