The Central Bank of Nigeria will explore the potential of stabbed, the adoption of blockchain technology to supply a digital currency of the central bank (CBDC) and regulatory considerations linked to the initial offers of coins (ICO) over the next two years.
These are the main points to remember from a political document entitled Nigeria Payments System Vision 2025, published by the Central Bank of Nigeria (CBN). The 83 -page document addresses a variety of implications for its existing payment landscape, with systems based on the blockchain which were to be highlighted.
The document immerses the implications of CBDC based on blockchain, describing 11 potential advantages of such an offer, including cash management, fight against counterfeit money, clear audibility, logistical improvements and payment efficiency.
The Central Bank of Nigeria believes that monetary policy can be improved by monitoring and adjusting a CBDC, which allows better control over the value of money. The bank also notes that it could better monitor and control tax evasion, money laundering and other illegal activities thanks to a CBDC.
Finally, the CBN is praising an improvement in financial inclusion and economic development, stimulating innovation and efficiency by stimulating competition between retail payment products of existing financial institutions. A period of three to five years is possible to deploy a CBDC solution in Nigeria, they said.
The stablecoins are also on the radar in Nigeria while the digital currencies supported by the Fiat are gaining popularity in different countries of the world. The CBN cites the need to develop a regulatory framework to implement stallions in Nigeria.
Related: the passion of Nigerians for the crypto is short
The CBN has a cautious vision of the ICOs, highlighting the “little appetite” to adopt existing ICOs given their “lack of regulation”. Despite this, the CBN identifies the role of ICOs as a class of assets and considers the potential in the adoption of ICOs as a new approach to fundraising for fixed assets, peer loans and crowdfunding.
Another point of interest in the policy document. The CBN mentions the “tangible advantages” to link the regulations to the transfer of ownership through intelligent contracts and the transfer of ownership of financial securities or the completion of commercial transactions.
The country is piloting its CBDC, Enaira, since October 2021, but the project has struggled to gain ground among citizens. A Bloomberg report in October 2022 said that the use of Enaira represents only 0.5% of the country’s population. Meanwhile, Nigerians are increasingly interested in cryptocurrencies, Google research data in mid-2022 highlighting appetite for crypto in the country.
Cointelegraph contacted Adesoji Solanke, director of Fintech and Capital Renaissance banks, to unpack the appetite for the trade in cryptocurrencies in Nigeria and the lack of adoption of the inresses issued by the government.
Solanke shared the same feelings, stressing that the Nigerians did not show a lot of interest in the air, despite the local banks that market it with their customers.
“There was no mass adoption of the air in the country at the moment of the consumer’s or merchant of the payments equation.”
Solanke said that the growing adoption of cryptocurrencies is motivated by their cross-border functionality and the speculative capital gain option they offer. According to Solanke, weighing if the tunes could become omnipresent in Nigeria is a more complex consideration.
First of all, more consumers should download and finance the portfolio. The EAIRA portfolio must provide multiple and superior use cases that use customers, merchants and other participants in the financial system. Merchants need a payment solution connected to the air and supplied by contactless devices that can read the portfolio via smartphones, QR codes or USSD codes.
Solanke also believes that there must be more explicit incentives for each sector to adopt the air. Incitations such as transaction fees and transaction and lower or low -merchant transaction and merchant transaction functionalities that transcend immediate financial services may stimulate adoption.
Stablecoins are another complex subject given the potential risk of their increased use “weakening the effectiveness of monetary policy,” said Solanke. This is one of the reasons why CBDC could be a major theme in the medium -term economic development and why central banks can seek to create regulatory clarity for stablecoins.
The potential adoption and regulation of ICOs would also require the CBN and the Nigerian Commission for securities and exchanges to work together, since they would be potentially treated as titles or a new asset class.
The Central Bank of Nigeria took a severe position towards the cryptocurrency sector in 2021, effectively prohibiting local banks from serving the exchanges of cryptocurrency. Some 18 months later, rumors of a policy reversal were reported by local media in the form of a potential amendment to existing laws which would recognize cryptocurrency as capital for investment.
