Through the lens of E-Naira: Looking at the future of the Central Bank Digital Currency

By: A A Isaactamson

With the inception of technology, growing opportunities, and the financial incentives associated with the digital technology; most central banks, experts, local and international agencies were compelled to explore possible means of payment that’ll be more efficient, easier, better, faster, and universally acceptable in this era. Recently, the continues growth in the patronage of cryptocurrencies by individuals and investors despite the several warnings of its illegitimacy by the appropriate authorities forced the Central Bank of many countries to act swiftly by adopting several measures towards curtailing the threats and economic implications posed by the private virtual currencies.




In the advent of the introduction of the Nigerian CBDC called e_ Naira, most of the citizens have described the move made by the Central Bank of Nigeria as an attempt to hijack the cryptocurrency market. Some people capitalized on the seeming similarities of CBDC and other private Virtual currencies to argue that both currencies are the same. 


The thing that most Nigerians are yet to understand concerning the restriction placed on the used of private virtual currencies is this: besides the fact that the Central Bank of every Country is the only legitimate body authorized to issue legal tenders inn this century, there’s no individual or financial institutions that have claimed the liability of any of those cryptocurrencies in circulation. That have made it difficult for even companies trading in such virtual currencies to accept it in place of money or in exchange for goods and services.


On the other hand, According to the central bank of Nigeria, the only difference between e_ Naira and the Naira Note is the form. This means that, CBDC once issued, can perform the same functions that the printed currencies do. I. e, it can be used to make payment, carry out transactions and also stored as value. Thus, the advent of CBDCs can be seeing as a dawn of another phase of monetary transformation that’s aimed at ensuring continues efficiency of payment system and satisfaction of the general public in an era of increasingly technology dependent economy.




Over the years, the rapid growth and expansion in the use of technology have led to several innovations and positive changes in the financial sector. The tremendous growth in the development of payment and banking technology is drastically reducing the rate at which people use the traditional ways of carrying transactions. The economy of many nations is fast becoming cashless as banking, payment, and other financial transactions are been done electronically. Thus, the rapid growth in the digitalization of banking and payment is facing out the traditional ways of transacting. The used of cash is declining in most societies and the desire of the general public to have access to a more easier, faster, and better means of transacting order than the traditional means did not exclude or address the need to access money that is issued, regulated, and is a liability of a Central bank. Hence it is but a necessity for Central banks to leverage on the widely accepted digital ways of transactions in order for it to retain its place and play its role effectively as the appropriate body in charge of determining the value of money and making it available to the general public.




As CBDC increasingly becomes the form of currency universally acceptable in this digital era, One of its advantages will be the reduction in the used of cash which will lead to the reduction of the cost associated with the production, distribution, management and storage of cash and also help in curtailing the transmission of communicable diseases such as COVID-19.


However, while we have several challenges that may militate against the success of CBDC ranging from policy, attributes, reason for development, structure of distribution, among others, the common factors are more likely to be technology related. This challenges and there implications vary with countries and may be minimal in developed countries but will highly affect the economy of developing countries. In Nigeria, the access to speedy and steady internet is relatively poor considering the fact that the network coverage is mostly skewed to the disadvantaged of the majority that are living in remote area and that will prevent individuals living in such places with little or no network coverage to carry out transactions using CBDC instead they may continue to rely mostly on cash for payment.


Another factor that may affect the success of CBDC in most developing countries is the level of financial and digital literacy. In most countries like Nigeria, a large number of its population lacks basic knowledge of how to effectively handle money and an equally large number finds it difficult to understand how digital technology works. Thus, this particular set of people maybe at risks of been excluded from using CBDC and those who attempt to cope with the trend are liable to become victims of other uncertainties such as cyberattack.



This predictable challenges and many others that are unforeseen, makes it difficult to celebrate the introduction of CBDC by any central bank as economic achievement. Because, the introduction of CBDC does not automatically make or imply any economic impact. The implication of any CBDC on the economy depends on the problems that inspire its design and the model that determines its place and relationship within the existing financial structure.


However, despite the complexity and uncertainty that characterized the concept and attributes of CBDC, its growing popularity among central banks and other financial institutions signals the possibility of it becoming the acceptable form of money of this era in the nearest future. Therefore while it is highly recommendable that all central banks and even international financial bodies should key into the project of making CBDC the acceptable form of money for this era, nevertheless, those that are already in the process of developing it, most be cautious enough to avoid the disruption of necessary and indispensable economic structures



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