CBN approves as Nigerian banks, Fintech firms release date for launch of Naira Stablecoin

The Nigerian government has said that banks and fintech firms are ready to launch the cNGN stablecoin on February 27, 2024.

The new stablecoin is backed by the Central Bank of Nigeria (CBN) and will be pegged 1:1 to the naira.

Legit.ng reported that the naira was ranked the worst-performing currency in Africa and the world in 2023.

An aide to President Bola Tinubu, Dayo Olusegun, said on social media that the stablecoin, known as cNGN, will let users transact anywhere in the world using the naira.

Users can also purchase and sell goods at the official CBN exchange rate. Per the post, the stablecoin will eliminate the traditional challenges of currency conversion and international transaction fees.

The statement also said the cNGN is similar to other stablecoins like the USDT and USDC and will join other currencies that can be used anywhere in the world.

Despite the similarity between the cNGN, the USDT is pegged to the dollar.

Users can use cNGN anywhere in the world

Experts have said Nigeria does not need a stablecoin but a stable naira to the US dollar.

A stablecoin is a cryptocurrency whose price is pegged to a reference asset like a fiat currency, a commodity, or other cryptocurrencies.

BusinessDay reports that the peg is a low-volatility asset meant to keep the value of stablecoins stable, unlike highly volatile cryptocurrencies.

By the peg of the cNGN to the naira, the financial institutions behind it expose investors to risks.

According to a statement, the naira stablecoin is part of CBN’s efforts to ensure the naira becomes a stable currency used by investors and users worldwide.

cNGN may replace the eNaira

Analysts believe the cNGN replaces the eNaira developed by the CBN and consumed billions of naira to build and promote under the former CBN Governor, Godwin Emefiele.

The post said. “⁠Unlike the eNaira, which is developed solely by the apex bank, the cNGN is managed by a consortium, the Africa Stablecoin Consortium (ASC).”

The cNGN is interoperable with strategic blockchains like Bantu and Binance Smart Chain.