Nigeria Payments System Vision 2025, the latest report from the Central Bank of Nigeria marked the necessity to create a legal framework for stablecoins.
The report states that, Digital currencies built on blockchain/DLT are technical and economic innovations that can enable fast and cheap value transfers to be made without the need for a central intermediary, and with enhanced trust, simplicity, operational efficiency, and customer experience.
A CBDC has the potential to be an enabler for transformation in the Nigerian economy. The consensus is that a 3-5-year implementation of a CBDC solution is achievable.
The report also mentioned the potential advantages of CBDC include:
- Reduction in the cost of cash management – Through the issuance of a CBDC, the CBN could save significantly on the costs associated with minting and issuing physical notes and coins, secure transportation, storage, and distribution, and the collection and replacement of damaged notes and coins.
- Non-counterfeit – The CBDC is cryptographically produced and cannot be counterfeited. The CBDC money supply will be exclusively issued and monitored by the CBN.
- Auditability – Each CBDC transaction is immutably recorded and can also be viewed and tracked in real-time,facilitating better compliance with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) frameworks.
- Logistical Advantages – Instant CBN issuance and distribution of DNGN will eliminate the time, costs, and other challenges of distributing and managing physical cash. An account based CBDC could serve as a practically costless medium of exchange.
- Payment Efficiency – CBDC will be able to facilitate lower cost of transactions, compared to existing mechanisms such as wire transfers, cheques, inter-bank transfers, bill payment, etc. lowering the overall cost of doing business.
- Monetary Policy – Real-time detailed information and reports on transaction activity including number of transactions, speed of transactions, and velocity of circulation of money are available with such a system.
- Price Stability – The real value of CBDC would remain stable over time in terms of a broad consumer price index.
The Governor of the Central Bank of Nigeria, Godwin I. Emefiele stated in the report that “The Central Bank of Nigeria (CBN) published the Payments System Vision (PSV) 2020 in 2006, to provide a roadmap for the reform of the Nigerian payments system. The strategy was revised in 2013 to address emerging issues and market realities related to risk management, compliance, governance and supervision.
“The PSV 2025 will focus the attention of critical stakeholders on contemporary developments that will drive digital innovations and payment in the future, such as contactless payments, big data, open banking, etc. I urge all stakeholders to join hands with
the CBN to execute initiatives under the PSV 2025 towards fostering efficient and secure payments systems in Nigeria,” he added.
Source: https://www.thecoinrepublic.com/2023/01/11/the-central-bank-of-nigeria-published-payments-system-vision-2025/