For much of 2021, the Central Bank of Nigeria (CBN) has been in the headlines for its anti-cryptocurrency measures. Yet, the institution has this week redoubled its investment and research into crypto’s underlying technology, blockchain, and has set a clear date for the pilot scheme of its blockchain-powered central bank digital currency (CBDC).
On October 1, CBN will reportedly launch a pilot scheme for “GIANT” – a CBDC project in development since 2017, which runs on the open-source blockchain Hyperledger Fabric.
Rakiya Mohammed, CBN’s information technology director, said the bank might conduct a proof-of-concept before the end of 2021. In a webinar this week with stakeholders, CBN representatives reportedly emphasized that the institution could not afford to be left behind while the vast majority of central banks worldwide make headway with their own CBDC research and development.
Among the motivations cited for the project, CBN has noted that a CBDC would be beneficial for macro and growth management, cross-border trade support, and financial inclusion.
Potential benefits could still extend further, in CBN’s view, ranging from higher efficiency for payments and remittances, better monetary policy transmission, improved tax revenue collection, and the facilitation of targeted social policies.
Alongside CBN, the Bank of Ghana has this summer been moving rapidly towards the pilot stage for its own central bank digital currency. The country has positioned itself as a pioneer in CBDC development on the continent and considers central bank-issued digital currencies to be superior to and less risky than decentralized cryptocurrencies.
However, Ghana’s wariness of crypto is overshadowed by Nigeria’s more aggressive measures, which include a ban on commercial banks and other financial institutions from servicing crypto exchanges. Despite this, Bitcoin adoption and BTC peer-to-peer trades have remained high in the country.