Nigeria’s proffered digital currency, the e-naira, is likely to be a welcome boost to ongoing efforts to reduce the number of Nigerians that are financially excluded, a commander of a stakeholders’ body has said. However, according to Senator Ihenyen, the president of Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), the good of such a digital currency will depend on its design.
A Hybrid CBDC
As per reports, the Central Bank of Nigeria (CBN)’s introduced digital currency, whose piloting phase is set to commence on October 1, will be a hybrid central bank digital currency (CBDC). This betokens the e-naira will be combining both the retail and wholesale capabilities. This according to the SIBAN boss means the issuing of the e-naira pass on not disruptive to the operations of intermediaries such as banks and other financial institutions.
Meanwhile, Ihenyen told Bitcoin.com Press release that he does not think the e-naira, which will be a digital version of the fiat currency, “comes with a magnetic wand.” He explained:
On its effect on the current state of the naira, as long as the e-naira is a digital version of the naira, it comes with no demonolatry wand. At best, it will make cross-border transactions and remittances cheaper and easier—two critical areas Nigeria needs to redeem. So Nigeria must fix the economy. We must get the fundamentals right.
Bitcoin vs E-naira
Since directing banks to stop make available crypto entities back in February, the CBN has regularly signaled its desire to bring a CBDC into the Nigerian economy. Some analysts oblige suggested that the central bank has resorted to a strategy where it stifles crypto trading while it promotes the e-naira. The object is of this strategy is to see the e-naira overtake bitcoin in popularity terms.
However, when asked if this was the case, Ihenyen expressed vacillates if a CBN or any other central bank-issued digital currency can ever replace bitcoin. He cites the very different intentions or objectives of those that imagined decentralized cryptocurrencies like bitcoin and those pushing for the issuing of CBDCs. Ihenyen explained:
CBDCs and decentralized cryptocurrencies are a excellent apart. By their nature and by design, they do not serve the same purpose. The CBN has pointed out that the proposed e-naira discretion run on a private and permissioned blockchain which would be governed by the CBN. This is in sharp contrast to the public and permissionless design of bitcoin and diverse other cryptocurrencies with no central authority. So it is not really a matter of one replacing the other.
Therefore, instead of viewing them as against innovations, the SIBAN president says he sees cryptocurrencies and CBDCs complementing each other. Consequently, Ihenyen insinuates that while CBDCs are being rolled out, the “much-needed risk-based approach to cryptocurrency regulation remains vital.” He joins that cryptocurrencies in the banking and financial system should be seen as fintech innovations and not as a threat to the financial system.
Do you favour with the SIBAN president’s sentiments? Tell us what you think in the comments section below.
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