The Central Bank of Nigeria (CBN) has issued preliminary guidelines for its proposed eNaira digital currency.
In the promotional documents sent to the country’s commercial banks, CBN outlined several design features of the Central Bank Digital Currency (CBDC).
According to documents seen by Cointelegraph, Nigeria’s CBDC is codenamed “Project Giant” and will be linked to the value of naira.
Therefore, eNaira will provide the same value but will not become an interest-bearing currency. eNaira will run with the country’s legal currency, and CBN will be responsible for the issuance, distribution and exchange of digital currencies and other monitoring and management functions.
According to sensitive documents, Nigeria’s CBDC will operate under a hierarchical anti-money laundering and Know Your Customer (AML/KYC) structure with different transaction restrictions.
According to reports, the bottom of the AML/KYC pyramid will include unbanked citizens who will be required to provide phone numbers related to national identity for verification. The daily transaction limit for users in this category is 50,000 naira (approximately US$120).
Depending on the number of AML/KYC steps completed, citizens with bank accounts can belong to the second and third tiers. The daily limits for these two levels are 200,000 naira (487 US dollars) and 1 million naira (2,438 US dollars).
In addition to the bank verification number requirements specified for the second layer, the third layer users may also have to complete the physical AML/KYC verification process.
Users classified as merchants will also be subject to the same 1 million naira limit as the third level, but there is no limit on the amount they can send to a bank account.
In fact, the CBN program ensures seamless transfers between eNaira wallets and bank accounts, and does not charge any fees for multiple types of transactions. The zero-fee structure may be a means to incentivize the adoption of digital currencies, especially when people complain about the heavy transaction costs associated with mobile and digital banks in the country.
The CBN document also provides a possible process for the International Money Transfer Operator (IMTO) and the proposed eNaira, indicating plans to integrate digital currencies with the central bank’s foreign exchange control policies.
The first option proposed by CBN is for the central bank to provide IMTO with secured eNaira credit through its banking partners in the country. The second option may be CBN to pre-fund the IMTO account, but this method may bring significant exchange rate fluctuation risks.
The third option provided by CBN will involve eNaira operating in the current foreign exchange structure, in which overseas remittances will be cashed in the CBDC by Nigerian beneficiaries.
As Cointelegraph previously reportedCBN plans to pilot the eNaira project in October.As early as June, the country’s communications minister linked the government’s efforts to promote blockchain adoption as a An integral part of Nigeria’s digital innovation.
Nigeria’s West African neighbor Ghana is also manufacturing Significant progress has been made in its own CBDC project.