The Central Bank of Nigeria (CBN) has issued preliminary guidelines for its proposed e-naira digital currency to Nigerian banks.
Several design features of the central bank digital currency (CBDC) were outlined by the CBN in a sensitization document sent to all commercial banks operating in the country.
According to the document, the CBDC dubbed “Project Giant” will be pegged to the value of the naira. This will ensure that the e-naira offers parity of value without being an interest-bearing currency.
The e-naira is slated to run alongside the country’s fiat currency, and the CBN will be responsible for issuing, distributing, and redeeming the digital currency, in addition to other monitoring and management functions.
Furthermore, Nigeria’s CBDC will operate within a tiered Anti-Money Laundering and Know Your Customer (AML/KYC) structure with different transaction limits. The base of the AML/KYC pyramid will accommodate unbanked citizens who will be required to provide their national identity-linked phone numbers for verification. The daily transaction limit for users in this category is ₦50,000 (about $120).
Users who own bank accounts fall under the second and third tiers depending on the number of AML/KYC steps completed. The daily limit for these levels is ₦200,000 ($487) and ₦1 million ($2,438), respectively.
To access the third tier, citizens will need to complete a physical AML/KYC verification process in addition to the bank verification required for lower tiers.
The CBN plans to ensure smooth transfers between e-naira wallets and bank accounts with no fees to encourage the adoption of the CBDC.
The document issued by the CBN also offers process flows for International Money Transfer Operators (IMTO) and the proposed e-naira, highlighting plans to integrate the digital currency with the central bank’s forex control policies.
The CBDC Race
Apparently, Nigeria’s apex bank is hoping to launch the CBDC before the end of the year, according to a report by BTC PEERS. Similarly, Ghana is also looking to improve its economy and financial services by piloting its own CBDC starting September.
Although several countries have jumped on the digital currency train, China is currently ahead of the pack, following the integration of its CBDC into its subway payment system.