A collaborative effort involving Nigerian banks, fintechs, and blockchain companies is underway to introduce a compliant Naira stablecoin, named cNGN, in 2024, following the recent circular from the Central Bank of Nigeria.
Naira Stablecoins Evolution
The idea of a Naira stablecoin has been circulating for years, with past attempts like NGNT by the Token Mint consortium in 2019. The newly proposed cNGN aims to be a regulated consortium-based Naira stablecoin, pegged 1:1 with NGN and held by Nigerian banks.
Key partners in the consortium include major Nigerian banks such as First Bank, Access Bank, Sterling Bank, and Providus Bank, alongside payment companies Budpay, Kora (formerly KoraPay), Interswitch, and blockchain consultants Convexity and Interstellar. The cNGN, like existing stablecoins, seeks to facilitate smooth international transfers of NGN.
Contrast with eNaira
Distinguishing itself from the eNaira, the cNGN will operate as a cryptocurrency, not a Central Bank Digital Currency (CBDC). The consortium will maintain and hold the cNGN, reducing direct control by the Central Bank of Nigeria. Regulatory oversight will be managed jointly by the CBN and the Nigerian Securities and Exchange Commission.
Impact on Monetary Policy and FX
The potential impact of the cNGN stablecoin on monetary policy and foreign exchange could surpass that of the eNaira, given its broader target audience. The recent reversal of the CBN’s bitcoin ban and new guidelines on digital assets could contribute to the cNGN’s adoption and success.
Multiple Nairas in 2024
The introduction of cNGN in 2024 will add a new dimension to Nigeria’s monetary landscape, alongside existing forms of Naira, digital (NGN, eNaira) and physical. The coexistence of these forms is expected to present both opportunities and challenges, influencing monetary policy, FX controls, and overall market dynamics in the coming year.