eNaira Digital Currency Launches today - A New Dawn for Banks

eNaira Digital Currency Launches today - A New Dawn for Banks: The launch of the eNaira currency today is a watershed event for banks. Nigeria makes history today by becoming the first African country to digitalize its currency, a feat the Central Bank of Nigeria (CBN) has dubbed "one of the milestones of a lengthy journey."


However, the launch of the eNaira is raising concern in the banking sector, despite the fact that the concept note admits the project may unsettle banks due to the possibility of disintermediation.


eNaira is only one of the disruptive technologies that banks will need to accept and adapt to in order to avoid being swamped, according to some experts.

                                         

After the Bahamas launched its version in 2017, Nigeria will become the fifth country to implement a centralised national electronic money, according to the global Central Bank Digital Currency (CBDC) tracking map.


Nigeria's presentation was originally set for October 1, 2021, but it was postponed due to other national celebrations commemorating the country's 61st independence anniversary, according to the apex bank.
The unveiling will take place in the State House in Abuja, and will be attended by President Muhammadu Buhari.

Read: Price and Specifications for the Redmi Note 11 and Redmi Note 11 Pro Leaked ahead of Launch

As the worldwide community welcomes the competition to create CBDC, the project gets underway.
Approximately ten central banks are currently piloting CBDCs, with six having completed proof of concept. China, for example, is framing its digital currency project as the primary method for internationalizing its currency.


Central banks all over the world, including China, the United States, and the United Kingdom, are debating whether or not to adopt or construct their own CBDC. The geopolitical stakes are immense, and China is far enough ahead in its experiments that it intends to introduce this new money to international tourists as soon as the 2022 Winter Olympics in Beijing.


Other countries, eager to participate in the "tech revolution," are vying to be among the first to implement CBDCs. Various countries with trial schemes include South Korea, Sweden, Cambodia, the Bahamas, and Hong Kong.

                      

South Africa has also announced a trial of CBDCs for cross-border payments, while Ghana's central bank is working to make its digital currency, the e-cedi, available to offline users as soon as possible.


On the underlying infrastructure's preparation for the rollout, CBN Director of Corporate Communications, Osita Nwanisobi, said yesterday that the apex bank was fully prepared.


CBDCs, like other forms of electronic money such as privately produced stable coins and cryptocurrencies, rely on blockchain technology to enable peer-to-peer (P2P) transactions and eliminate intermediaries.


"Bank executives are highly concerned that a widespread adoption of eNaira could diminish the volume of enterprises performed by banks and transaction revenues," according to a source who has been monitoring the discomfort among top bankers.

Check Now: Redmi Note 11 Series Launch confirmed for October 28, with three variants hinted

Banks, like other businesses, have no control over the evolution and implications of blockchain, according to Ken Ife, an economics professor and international finance specialist.
He predicted that bankers will either retool their operations to take use of new technology or risk being left behind.


"All means of production and exchange are defined by technology; there is no limit."
Blockchain technology has shown itself as a viable option. It all comes down to what you can accomplish with it. It will have an impact on the banking industry, just as it will on all other industries. It will render the old banking model, which is associated with high expenses, obsolete.
"Either the banks accept it constructively or they will be overrun by the revolution," Ife emphasized.


Also, David Adonri, Vice President of Highcap Securities Limited, said lenders' fears are "genuine" because "a lot of the revenues are truncation-based." He was curious about the role banks could play in the ecosystem, which is projected to be dominated by peer-to-peer (P2P) transactions.


According to the professor, "the current epidemic of shoddy banking sector supervision," in which "banks and regulators share roles and tasks as operational equal partners," the eNaira will devalue the naira.


The Director-General of the Securities and Exchange Commission (SEC), Lamido Yuguda, stated eNaira should be positioned to compete in the cross-border payment system during a recent session organized by the Chartered Institute of Bankers of Nigeria (CIBN).


Although the introduction today gave Nigeria a head start, the design parameters, as Yuguda pointed out, will determine eNaira's competitiveness in both regional and global payment markets.