The new stablecoin cNGN is in development by a group of Nigerian banks, fintechs, and blockchain businesses. It will adhere to the regulations set by stakeholders and be a controlled Naira stablecoin.
The Nigerian Naira will be pegged 1:1 to cNGN, but unlike previous stablecoin drafts, it will be owned by Nigerian banks and recognized as legal money. Forbes reports that the debut is scheduled for 2024.
Despite being a cryptocurrency, like other stablecoins, cNGN will not be a digital money as in prior versions. This development comes after the Central Bank of Nigeria lifted the ban on cryptocurrency transactions last week. The coin will be serviced by the consortium and owned by its banks.
In February 2021, the central bank, led by Mr. Godwin Emefiele, prohibited credit institutions from engaging in cryptocurrency-related activities, affecting many bitcoin firms.
The decision to lift the restriction stems from the realization that cryptocurrencies play a significant role in global financial systems. The use of cryptocurrencies in Nigeria, one of the fastest adopters, is deemed unavoidable.
Nigeria has attempted to transition to a digital currency multiple times. The cashless policy was implemented in 2012, aiming to enhance the payment system's efficiency, lower banking service costs, and improve monetary policy effectiveness.
The eNaira Central Bank Digital Currency was established in October 2021. However, its acceptance rate has been poor since its launch on October 25, 2021.
The eNaira was marketed as a way to reduce reliance on fiat currency and cash and bring more people into the country's financial inclusion agenda. Approximately 40 million individuals in Nigeria do not have a bank account.
Despite the Central Bank's efforts to promote CBDC usage through various campaigns, only one in 200 citizens has adopted the digital currency.
