The Central Bank announced plans to launch its own digital
currency later this year after Nigeria barred banks and financial institutions
from dealing in or facilitating transactions in cryptocurrencies in February.
Central Bank Governor Godwin Emefiele has said the eNaira
would operate as a wallet against which customers can hold existing funds in
their bank account. In a statement on Monday, Emefiele said the currency would
accelerate financial inclusion and enable cheaper and faster remittance
inflows.
Barbados-based Bitt earlier this year led development of the
Eastern Caribbean Currency Union’s “DCash”, the first digital cash issued by a
currency union central bank.
Official digital currencies are more “risk-free” than
private electronic payment systems as they are backed by the central bank. They
also cut out the middle man, reducing the cost of transactions, and make
e-payments possible for those without bank accounts.
The Caribbean firm had led its development. The pilot
includes Antigua and Barbuda, Grenada, Saint Kitts and Nevis, and Saint Lucia.
Large central banks across the world are stepping up efforts
to develop digital currencies to modernize financial systems, speed up payments
and counter a possible threat from cryptocurrencies.
Still, efforts by major authorities are mostly at the
drawing board, with the People’s Bank of China’s plans the most advanced. The
U.S. Federal Reserve has said it is more important to get its approach right
rather than leading the pack.
The Caribbean though has already broken ground: The Bahamas
last year became the first country to launch a central bank digital currency
(CBDC) nationwide.
The DCash, a blockchain-based, digital version of the
Eastern Caribbean dollar, pegged at EC$2.70 to US$1, is the first CBDC to go
live in a currency union which could offer tips to other such blocs like the
euro zone on how it could work in practice.