The Central bank of Nigeria promises to launch its digital currency, the eNaira on October 1st, 2021. But was launched on October 25th. The reason for the shift is likely due to the events of the independence day celebration in Nigeria. The central bank digital currency (CBDC) has some features that the cash form of Naira doesn’t have. In this article, let’s focus on explaining eNaira.
Definition of eNaira
According to the Central Bank of Nigeria (CBN), eNaira is the central bank digital currency (CBDC) issued by the central bank of Nigeria as a legal tender. It is the digital form of the Naira and will be used just like cash.
It can also be defined as a digital currency made available by the central bank of Nigeria and serves as a legal tender, medium of exchange, and store of value.
The electronic money will be issued by the Central bank of Nigeria. Nigerians may start using the eNaira starting October 25th. An individual registered on the website or mobile app. You can buy digital money from any of your bank accounts. Digital money is an asset to the individual or corporate body in possession of it. And it is a liability to the CBN
With this platform, an individual can transfer money from one country to another without the need for foreign exchange. This is made possible through the eNaira wallet. The wallet aids storage and transfer of the currency. An individual in the United Kingdom for example can send money to a person in Nigeria. Also, a family member in Canada can remit cash to his mother in the village.
The CBDC is a legal tender. This means that it is backed by the law of Nigeria. Therefore, it must be used by everyone in the country. Within the country, it can be used to trade and invest. You can use it to order a product in an e-commerce store. It can be saved in the wallet or invested in an investment platform that will in the future utilize the eNaira infrastructure and its API. Digital money is pegged to fiat currency. Therefore, it is not backed by Gold, but the value of fiat money in Nigeria.
What else you should know about eNaira?
Blockchain technology was not used to make the eNaira. This means that the CBDC is in a centralized ledger. e-Naira will aid borderless transactions. In addition, it reduces transaction costs. For example, you want to make a transaction from Nigeria to another country using a debit card. However, the transaction is effected by the exchange rate and it is outside the border of the country, an additional fee will be charged by your bank. Thereby, increasing the cost of the transaction. With blockchain te, the website or app can be assessed anywhere in the world. Border restriction la that should increase the cost of transactions has been eliminated.
The eNaira is issued by the central bank. If you own the currency, it becomes an asset to you and a liability to the CBN. It is legal tender. Therefore, you can trade and invest with it. It makes transaction costs cheaper and encourages borderless transactions. Digital currency is another way the CBN tends to push for its cashless policy.