PUBLIC PERCEPTION OF NIGERIA ELECTRONIC NAIRA
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PUBLIC PERCEPTION OF NIGERIA ELECTRONIC NAIRA
Chapter one
INTRODUCTION
1.1 Background of the Study
Without a doubt, the global financial system is embracing the present technological shift from physical currency to virtual currencies. In recent years, fast technical innovation and new business models have resulted in a wave of fresh retail payment options.
These developments indicate significant changes in the retail payment environment, including a drop in cash usage. As a result of this tidal wave, digital currency innovation emerged.
According to Gilbert, Scott, and Loi, Hio. (2018), digital currencies have qualities comparable to traditional currencies, but unlike printed banknotes or minted coins, they rarely have a physical form.
The lack of a tangible form enables near-instantaneous online transactions while eliminating the costs of shipping cash and coins. As a result, as long as both parties accept the currency’s legitimacy, digital currencies will remain helpful for inter-party transactions, as they offer the advantage of quick settlement, particularly in online communities.
Although cryptocurrency is the most popular type of digital currency, there are thousands of them in the modern world, each of which operates and benefits from security due to the mutually adopted encryption codes by the parties involved in such transactions, especially since most governments around the world have shied away from conferring any form of endorsement or legitimacy on transactions conducted through such channels.
Taking advantage of this rapid technology innovation and financial market development, international economies have begun to transition from paper currency to digital currency, and Nigeria is no exception.
According to Abdulkareem M. (2021), central banks around the world have been working delicately on their digital currency by gradually weaning themselves off rapidly declining cash payments
which is why the Central Bank of Nigeria joined the fray so that Nigeria is not left behind, resulting in the launch of her e-Naira, which comes after instructing banks to close cryptocurrency and ban crypto-related accounts in February 2021 (premiumtimesng.com).
However, the consequences for payment system efficiency, as well as any risks associated with the operation of these systems, remain to be determined.
Thus, if digital currencies become widely used for large-value transactions or for asset types other than funds transfers, their impact on other areas of central bank responsibility, such as payment system oversight and regulation, financial stability and monetary policy, and associated fraud and money laundering tendencies, may become more prominent, posing a relatively high risk to public users.
Following the anticipated launch of the e-Naira standards, a follow-up to this stipulation has emerged, garnering considerable public interest.The prospect of efficient execution of the guidelines in a way that benefits the public interest while avoiding avoidable hazards is of prime importance to the Nigerian people.
Furthermore, because transactions in this manner take place without any physical exchange of funds but rather through computers that are still mysterious to the majority of Nigerians, the amount of exposure to digitally non-compliant people remains high.
1.2 Statement of the Problem
Prior to the introduction of electronic naira, Nigeria’s paper naira had a large foreign exchange crisis, and the rate of depreciation of the naira raised considerable concerns among people, necessitating the need to try an alternative legal tender.
Furthermore, the CBN’s recommendation to ban cryptocurrencies earlier this year highlights the importance of transitioning the country’s currency from paper to electronic.
According to Kalu (2021), the Central Bank of Nigeria issued its own digital currency to reduce the cost of managing paper currency, leverage emerging digital technologies, improve the digital readiness landscape, mature identification registries, and drive financial inclusion.
While the benefits of digital money in allowing for faster transactions are significant, the exercise’s negative consequences cannot be overlooked.
Adolphus (2021) stated that the country’s financial industry is currently experiencing significant issues due to poor administration, which has persisted. As a result, the introduction of e-Naira should not exacerbate the sector’s problems.
Thus, it is critical to ensure that all project operators have a verifiable track record and a level of integrity on which the public can rely. Closely related to the issues is the perplexing state of effective implementation of the recommendations, which has been clouded by a lack of public education and enlightenment regarding the smooth transition of more Nigerians to digital transactions.
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