In response to a circular from the Central Bank of Nigeria (CBN), a consortium of Nigerian banks, fintechs, and blockchain companies is working on developing a compliant Naira stablecoin, named cNGN, set to be launched in 2024. The stablecoin aims to provide a regulated and consortium-based digital representation of the Naira, held by Nigerian banks.
Background:
- Previous attempts at creating a Naira stablecoin include NGNT by the Token Mint consortium in 2019.
- The newly proposed cNGN will be pegged 1:1 with the Naira and held by Nigerian banks in the consortium.
Key Partners in the Consortium:
- First Bank, Access Bank, Sterling Bank, Providus Bank (Tier-1 banks).
- Fintech companies: Budpay, Kora (formerly KoraPay), Interswitch.
- Blockchain consultants: Convexity, Interstellar.
Differences with eNaira:
- cNGN will function as a cryptocurrency stablecoin, not a Central Bank Digital Currency (CBDC).
- It will be maintained by the consortium, and banks will hold cNGN, providing more autonomy than the eNaira.
Regulatory Oversight:
- The CBN and the Nigerian Securities and Exchange Commission (SEC) will play roles in regulatory oversight.
- Unlike the eNaira, the CBN won’t have direct control over the cNGN.
Potential Impact:
- The cNGN could have significant effects on monetary policy and foreign exchange dynamics, given its broader target audience.
- The stablecoin might see greater adoption than the eNaira, especially with the recent relaxation of the CBN’s stance on digital assets.
Naira Landscape in 2024:
- With the addition of cNGN, there will be multiple forms of the Naira in circulation, including physical notes and digital currencies (NGN, eNaira, and cNGN).
- The presence of these variants may impact monetary policy, foreign exchange controls, and overall market dynamics.
The move to introduce a compliant Naira stablecoin reflects ongoing developments in the digital currency landscape in Nigeria and demonstrates collaboration between traditional financial institutions and emerging fintech solutions.
