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2024, Nigeria Banks Set To Launch Compliant Naira Stablecoin

Following the Central Bank of Nigeria’s circular, a consortium of Nigerian banks, fintechs, and blockchain companies are developing a Naira stablecoin, cNGN, with sources close to the project stating a planned launch in 2024.

Naira Stablecoins

The concept of a Naira stablecoin has been floating around for several years, with previous attempts in the past. The most recent was NGNT by the Token Mint consortium in 2019, consisting of major Nigerian crypto exchanges and African communities, including Helicarrier and Busha. NGNT is pegged 1:1 with the Naira and is on the Binance Smart Chain and the Ethereum Network, as BEP-20 and ERC-20 tokens, respectively.

The New Naira Stablecoin (cNGN)

The newly proposed cNGN will be a compliant and regulated consortium-based Naira stablecoin. The cNGN will be pegged 1:1 with NGN, but unlike previous NGN stablecoin attempts, it will be held by Nigerian banks.

The key partners in the consortium include prominent Nigerian tier-1 banks such as First Bank, Access Bank, Sterling Bank, and Providus Bank, payments companies Budpay, Kora (formerly KoraPay), and Interswitch, and Blockchain consultants Convexity and Interstellar. The proposed cNGN stablecoin, similar to existing stablecoins, will facilitate seamless international transfer of NGN.

Nevertheless, there are still many unknowns about the cNGN that will need to be clarified by the consortium, such as the blockchain it will use and the planned apps and services for consumers.

Differences With The eNaira

There are a few key differences between the eNaira and cNGN worth noting; for starters, the cNGN will be a crypto, like other stablecoins, and not a CBDC. The cNGN will be maintained by the consortium and will be held by the banks in the consortium.

The CBN will not have direct control over the cNGN in the same way it does with the eNaira, and the role it, along with the Nigerian Securities and Exchange Commission, will be playing is one of regulatory oversight.

The benefits and effects of the cNGN stablecoin on monetary policy and FX could be more significant than the eNaira, given its wider target reach. Further, the cNGN might indeed have greater adoption and success than the eNaira, especially given the recent reversal of the CBN’s bitcoin ban and their new guidelines on digital assets.

The cNGN, eNaira, And Other Nairas In 2024

There was initial speculation for the motives of the CBN in 2021 for its bitcoin ban, as being done to pave the way for its CBDC to dominate. However, even if true, it certainly didn’t work. Nevertheless, it goes without saying that the cNGN would only be possible with the recent CBN circular and their cooperation as a regulator alongside the Nigerian SEC.

Following the harsh year in Nigeria and the Naira situation, in 2024, there will now be four distinct instances of the Naira in circulation, a mix of both digital (NGN, eNaira, and cNGN) and old and new physical Naira notes, which is sure to persist some of the economic challenges observed in 2023 and have effects on monetary policy, FX controls and overall market dynamics.

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