A CBDC is a digital form of central bank money that is designed to be used as a legal tender for transactions. Unlike cryptocurrencies such as Bitcoin, CBDCs are issued and backed by a central bank and maintain a stable value, unlike volatile cryptocurrencies that lack price stability. CBDCs have the potential to increase financial inclusion, enhance secure and low-cost payments, and allow for better control and transparency over cash circulation. Many countries are exploring the feasibility and potential benefits of implementing a CBDC, while some have already launched their digital currencies such as Nigeria’s eNaira.
CBDC is a digital version of the Nigerian currency, the naira, issued by the CBN which is backed by the Nigerian government. It is designed to promote financial inclusion, enhance payment efficiency for businesses, reduce payment costs, foster economic growth, and perform cross-border trade. The CBN launched the pilot phase of its CBDC project, known as Project GIANT, in October 2021, being the first digital currency issued by a central bank in Africa. The project has since expanded its testing to include several banks and mobile money operators.
Recently, transactions using Nigeria’s Central Bank Digital Currency (CBDC) have surged over 63%, according to the latest report from the Central Bank of Nigeria (CBN). The report revealed that over the past year, the use of CBDC has increased significantly, with an average of 2.2 million transactions processed per day, reaching 22 billion naira ($48 million) this year.
The report attributed the growth in CBDC transactions to the increasing adoption of digital payments in Nigeria, as well as the ease and security of using CBDC. The report also noted that the average value of CBDC transactions had increased over the past year, indicating that Nigerians are using CBDC for larger transactions.
The CBN has been actively promoting the use of CBDC in Nigeria, and the latest report is expected to boost its efforts to launch a full-scale CBDC system soon. The CBN has said that it is working on a regulatory framework for CBDC, which will ensure that the system is secure, resilient, and accessible to all Nigerians.