Nigeria, 80 other countries explore Central Bank Digital Currency
Nigeria, and 80 other countries, which in total represents over 90 percent of the global GDP are now exploring a Central Bank Digital Currency (CBDC).
Central Bank Digital Currency (CBDC) is the digital form of a country’s fiat currency that is also a claim on the central bank. Instead of printing money, the central bank issues electronic coins or accounts backed by the full faith and credit of the government. CBDCs differ from digital money like cryptocurrencies, which are private and decentralised token
Rakiya Mohammed, director of information technology, Central Bank of Nigeria (CBN) announced that the CBN may pilot its CBDC as early as October 1st, 2021.
Describing the essence of digital currencies, the International Monetary Fund explained: “CBDCs are more cost efficient than physical cash as they have lower transaction costs; they can promote financial inclusion, meaning those who are unbanked can get easier and safer access to money on their phone; they can compete with private companies that need incentives to meet transparency standards and limit illicit activity; and they can help monetary policy flow more quickly and seamlessly.”
Meanwhile, Ghana has indicated that it will begin testing its digital cedi by September. Other African countries piloting or developing their CBDC are Kenya, Rwanda, Madagascar, South Africa, and Egypt amongst others.
Outside the continent, China is racing ahead by allowing foreign visitors to use the digital yuan if they provide passport information to the People’s Bank of China during the upcoming Winter Olympics.
Data from The Atlantic Council’s Geoeconomics Center revealed that, of the countries with the 4 largest central banks (the US Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England), the United States is furthest behind.
The research data shows that 5 countries have now fully launched a digital currency; The Bahamian Sand Dollar was the first CBDC to become widely available.
14 other countries, including major economies like Sweden, United Arab Emirates, and South Korea, are now in the pilot stage with their CBDCs and preparing a possible full launch. Others are Lithuania, Ukraine, China, Hong Kong, Thailand, Singapore and more.
Although there are already thousands of virtual currencies, commonly called cryptocurrencies, the fully decentralized versions of cryptocurrencies such as Bitcoin, Ethereum, Altcoin, Dogecoin, and others. Cryptocurrencies run on distributed-ledger technology, meaning that multiple devices all over the world, not one central hub, are constantly verifying the accuracy of the transaction.
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