Nigeria and India announce new digital currency plans

Nigeria and India are reportedly set to move ahead with plans to implement central bank digital currencies (CBDCs).

A CBDC is a state-backed digital token that represents a virtual form of the fiat currency of a particular nation.

Households and businesses can use these tokens to directly make electronic payments to each other without the use of a bank as a third-party intermediary.

The Central Bank of Nigeria (CBN) is reportedly set to launch a pilot CBDC project on October 1.

The announcement came from the West African bank’s information technology director, Rakiya Mohammed, in a webinar to the bank’s stakeholders.

Mohammed said a CBDC could facilitate better growth management and improve cross-border trade support and financial inclusion in the country.

Reserve Bank of India (RBI) deputy governor T Rabi Sankar has also said the central bank is considering introducing a CBDC in a gradual manner.

The announcement came on July 22 at a conference hosted by the Vidhi Centre for Legal Policy, an Indian government think-tank.

Sankar said the introduction of a CBDC could reduce the Indian economy’s use of cash, enable improved international settlements, and protect consumers from volatile private cryptocurrencies

The South Asian country has previously taken a hard line on cryptocurrency regulation; a government panel proposed a ban on all private cryptocurrencies in 2018 and suggested up to 10 years of jail time for violations.

The news comes as CBDCs continue to pick up speed internationally; earlier this month China’s digital currency trial hit $5.3 billion in overall transaction value.

“We have studied specific-purpose CBDCs proposed by different central banks around the world for wholesale and retail segments,” said Sankar from RBI. “The launch of a general-purpose CBDC for population scale is being considered, and RBI is working towards a phased introduction strategy and examining use cases with little or no disruption of India’s banking and monetary systems.”

He added: “However, conducting pilots in wholesale and retail segments may be a possibility in near future.”

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