Central Bank Of Nigeria Increases CBDC Use By Restricting Cash Withdrawals

Nigeria is pushing hard in the adoption of digital currency and moving towards a cashless society as the country’s central bank announced limits on cash withdrawals over the counter or via ATMs. The new policy affects more than 200 million people, and its impact can be far-reaching and unpredictable.

According to Decrypt, the Central Bank of Nigeria has announced in a deposit money bank (DMB) that they will implement a new monetary transaction policy on January 9, 2023, in which individuals are entitled to weekly cash withdrawals.

Cash withdrawals from businesses cannot exceed 500,000 naira (approximately $1,123) and withdrawals from ATMs are capped at 20,000 naira (approximately US$45) per day. In addition, payments will be charged a processing fee of 5% and 10% respectively.

Nigeria’s phasing out of physical cash goes hand-in-hand with its push to encourage adoption of its central bank digital currency (CBDC), the eNaira.

Launched in October 2021, the eNaira was the second central bank digital currency after the Bahamas’ Sand Dollar, and uses similar blockchain technology to cryptocurrencies, though unlike cryptocurrencies, it’s ultimately overseen and managed by the country’s central bank.

With Nigeria’s largely informal economy powered by cash transactions, adoption of the eNaira has been somewhat tepid.

A banker told Decrypt that customers are not keen on using eNaira, even when they make electronic transactions, citing no clear difference between the value of naira and eNaira.

As updated in the previous article, not only controlling the amount of cash, the country wants to promote CBDC through the whole legal system. Yesterday it was reported that Babangida Ibrahim, Chair of the Institutions and Capital Markets Committee of the Nigerian House of Representatives, revealed that the House of Representatives will soon pass an amended version of the 2007 Investment and Investment Act.

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