What You Should Know About eNaira
A few months ago, the Nigerian Central Bank announced the release of eNaira, a central bank digital currency. What is it used for? This guide will highlight all you should about the newly launched eNaira.
eNaira is The First of its Kind
eNaira is one of the first official digital currencies of its time. According to Godwin Emefiele, Central Bank of Nigeria’s governor, $1.21 million eNaira has been minted and is ready for use. This currency is the Nigerian Naira in digital form.
Handled by the Central Bank of the country, the digital currency operates on blockchain ledger technology. This means that it cannot be duplicated, nor can fake notes be minted.
This digital currency is not a cryptocurrency as some people may think, rather, it is the equivalent of a legal tender and is issued by the highest banking authority in the country. eNaira is pegged to the Naira as well and this means it will not lose value or fluctuate higher. 1 Naira is equivalent to 1 eNaira. The whole point of this digital currency is to ease transactions.
How It Works
This digital currency is accessible through a wallet. Users can use their wallets for transactions like they would normal digital wallets. Also, they can be exchanged for other digital currencies offered by the central bank.
eNaira will be supplied to customers and individuals by financial institutions who will in turn get it from the central bank. Financial institutions such as banks will need to have a treasury wallet that will be used to take the digital currency from the apex bank. Also, banks will be responsible for KYC processes such as ID verification. They will also oversee wallet generation and eNaira payment processing.
Users can connect with their banks to carry out transactions from the wallet. Also, eNaira wallets have transaction limits. There are 4 tiers that determine your transaction limit. The limits can be as low as 20,000 Naira and go as high as 5,000,000 Naira.
During the launch, the CBN governor stated that users on the platform would not incur any charges for transfers and payments for 90 days. When this time elapses, the fees would be the same as others charged in financial institutions and banks.
Why Was It Created?
According to the CBN, eNaira was created to complement the nation’s currency, the Naira. It is meant to be a more affordable, acceptable, efficient, and safe means of conducting transactions. The apex bank also hopes that it will enhance monetary policy effectiveness and boost remittances. They also hope that it can be used by the government to deploy social interventions in a verifiable way.
This digital currency eliminates the need for a third party during transactions and this could go a long way to reduce the cost of transactions as well as wait times. It also offers a seamless operation for users of different demographics. The digital currency will also be used by businesses, individuals, non-governmental organizations, Nigerians in the diaspora, MDAs, and religious organizations.