In its adventure to actualize its highly anticipated digital money, the Central Bank of Nigeria has revealed preliminary guidelines for its proposed eNaira to commercial banks.
According to the document containing the guidelines received by commercial banks in the country, the apex of bank Nigeria outlined the design philosophy of the CBDC project, codenamed as “Project Giant” revealing it is pegged to the value of the Naira, the fiat currency of the country.
The eNaira will have equal value and serves as a currency that bears no interest. It was revealed that the Central Bank of Nigeria will be responsible as the controller, issuer, distributor, and redeemer of the digital currency.
The CBDC will function with strict observance of the Anti-Money Laundering and Know Your Customer (AML/KYC), and there will be differences in transaction limits.
The least on the AML/KYC structure are the citizens that do not have a bank account. They will need to present a means of identification, such as a national identity connected to a phone number for verification. Their daily transaction limits will stand at #50,000 which is equivalent to $120.
The second category and third category of users would depend on the level of completion of AML/KYC. Users in this category will have their daily limits pegged to #200,000, an equivalent of $487 and #1 million ($2,438), respectively.
However, the third category of users would have to satisfy the physical AML/KYC verification process, plus the requirement requested in the second tier. Merchants will also be in this category with the same daily limit; however, what differentiates them is that there is no limit to what they can receive.
The aim of CBN with the CBDC is to hedge against the problem of mobile money, such as high transaction fees and ensure seamless transfer within Nigeria with the zero-fee structure of the CBDC.
The document also indicated a process to follow for trans-national money transfers and noted it would be adding the CBDC with the central bank’s forex control policies.
Among options proposed by the CBN for international money transfer is to offer collateralized eNaira credit to IMTOs via their banking partners in Nigeria and pre-funding IMTO accounts, which might carry significant exchange fluctuation risks.