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The Central Bank of Nigeria has said that it is preparing to test a sovereign digital currency in order to reduce international remittance limitations.
Rakiya Mohammed, an IT specialist at the Central Bank of Nigeria (CBN), has claimed that the apex bank is working to launch a central bank digital currency in Nigeria.
According to a report by People’s Gazette, Mohammed made this known after the Bankers Committee meeting held in Abuja on Thursday, telling reporters:
“Before the end of the year, the Central Bank will be making a special announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace.”
Despite the present restriction, CBN governor Godwin Emefiele indicated in May that digital currencies will “come to life” in Nigeria.
Indeed, in February, Nigeria’s central bank prohibited commercial banks and other financial institutions from serving cryptocurrency exchanges, citing discredited assertions that cryptocurrencies were predominantly used for criminal transactions.
According to Mohammed, the CBN’s digital currency would work in tandem with naira cash notes. The IT professional also stated that the anticipated digital currency will be utilised to reduce the country’s FX limitations.
As previously reported, the CBN’s “Naira defence” strategy has resulted in increasing crypto usage in Nigeria in the run-up to the February ban.
Foreign remittances make for the majority of Nigeria’s non-oil FX earnings, with millions of its expatriate population living abroad supporting family members back home. According to World Bank data, such payments totalled $26.4 billion in 2019.
Mohammed indicated that the CBN has been investigating the potential of a central bank digital currency for around two years. According to the CBN official, the top bank is planning to construct a proof-of-concept blockchain to conduct pilot testing for the project.
Nigeria’s CBDC intentions follow a similar declaration from neighbouring Ghana. Earlier in June, Ghana’s central bank revealed plans to become the first in Africa to implement a CBDC.