The new Central Bank of Nigeria digital currency eNaira is expected to facilitate financial inclusion and exchange, but potential risks need to be addressed.  (Photo die Andre M. Chang / ZUMAPRESS / Newscom)

The new Central Bank of Nigeria digital currency eNaira is expected to facilitate financial inclusion and exchange, but potential risks need to be addressed. (Photo die Andre M. Chang / ZUMAPRESS / Newscom)

Five observations on the digital currency of the Central Bank of Nigeria

By Jack R.
IMF Africa Department

November 16, 2021

The Central Bank of Nigeria (CBN) officially launched on October 25, 2021, “Inira” – Central Bank Digital Currency (CBNC) —October 25, 2021. This is the second CBC to be open to the public after the Bahamas.

Other countries and regions, such as China and the Eastern Caribbean, have been hosting CBDC pilots with their citizens. Given the size and complexity Nigerian EconomyThis startup is attracting a lot of interest from the outside world, including the central banks.

What is Inira?

Such as coins or cash, of Inira It is the responsibility of the CBN. Einara uses the same blockchain technology as Bitcoin or Ethereum and as such, Einara is stored in digital wallets and can be used for payment transactions; And it can be transferred digitally and at no cost to anyone in Inira’s wallet. However, there are important differences. First, eNaira shows strict access controls at the Central Bank. Second, unlike these crypto-currencies, the naira is not a financial asset in itself, but a numerical form of the national currency and draws its value from the physical naira, which is expressed equally.

Why did Nigeria promote Nigeria?

According to CBN, Ininara is working to bring a number of benefits, which are expected to be expanded and supported by a strong control system. The main benefits include:

  • Increased financial inclusion.
    Currently, Inira’s wallet is only available to people who have a bank account, but it is expected that the cover will eventually be extended to anyone with a mobile phone. Allowing large numbers of people do not have a bank account (38 million people, 36 percent of the adult population), and allowing them to have access to mobile phones will increase financial inclusion and facilitate more direct and effective implementation. Social transition programs. The move is expected to benefit up to 90 percent of the population.
  • Facilitate exchanges.
    Nigeria is one of the key remittance companies in sub-Saharan Africa with $ 24 billion in remittances by 2019. Of the transaction. Inira is expected to reduce remittance costs, which will enable the Nigerian Diaspora to access Inira from international remittance operators and send them to Nigeria free of charge. Exchange rate fluctuations, including integrated market clearance rates, include incentives to send in Einara bags that reduce the gap between official and parallel market prices.
  • Informality has decreased.
    Nigeria has a large informal economy, trade and employment, with more than half of GDP and 80 percent employment. Einara is account-based, and transactions can be fully tracked in principle, unlike tokens based on tokens. If the naira expands and enters the economy, it can bring more transparency to informal payments and strengthen the tax base. Non-formal and informal businesses can also benefit if the adoption of Ininara improves high financial inclusion.

What are the possible dangers?

Like other digital currencies, eNaira poses risks to monetary policy implementation, cyber security, operational efficiency and financial integrity and stability. For example, eNaira wallets may be recognized or operated efficiently as a deposit in the Central Bank, which may reduce the demand for deposits in commercial banks. Relying on digital technology, it is important to control the cybersecurity and operational risks associated with Inira.


What are the authorities doing to reduce the risk?

Authorities have taken steps to control the hazards. Transferring bank deposits to Inira bank wallets is subject to daily transactions and accounting restrictions to prevent the risk of reducing the role of banks and other financial institutions. Financial security risks are lessened by the use of standardized authentication systems and relatively strict controls for users, as there is a risk of counterfeiting, such as money laundering. For example, currently only people with a bank verification number can open a wallet, but over time the coverage will be expanded to those who have registered SIM cards and have a mobile phone but do not have an ID number. The latter category of owners is subject to strict transactions and accounting restrictions. However, wallets that meet the highest identification requirements cannot each hold more than 5 million naira (around $ 12,200). Regular IT security assessments are expected to address cyber security threats.

What can the IMF do?

The IMF is ready to provide technical assistance and policy advice. The IMF Finance and Capital Markets Department has been involved in the eNaira release process, including providing product design reviews. The 2021 IMF Article IV Mission emphasizes the importance of monitoring the risks and macro-financial impacts of the Central Bank’s digital currency.


The IMF is ready to work with the authorities on data analysis, cross-country studies, sharing experiences with other countries, and further developments, control frameworks, and other aspects of Iran.

Jack Re He is an economist in the IMF Africa Department.


A press release is expected to be posted in mid-November 2021 to conclude the 2021 Nigeria Article IV consultation.