Nigeria has become the latest country to launch a digital currency backed by its central bank with the aim of improving its payments system.

From tomorrow residents of Africa’s largest country by population will be able to make payments using the eNaira, a digital compliment to the country’s physical currency. The e-money will be backed by the Central Bank of Nigeria and “marks a major step forward in the evolution of money,” according to the government.

In a statement, Nigeria’s government said “the launch of the eNaira is a culmination of several years of research work by the Central Bank of Nigeria in advancing the boundaries of payments system in order to make financial
transactions easier and seamless for every strata of the society.”

It comes as countries worldwide mull the introduction of digital currencies backed by central banks (CBDCs) which capitalise on the popularity of crypto by offering cheap and ultra-fast payments infrastructure.

The People’s Bank of China is a front runner in the field and has already issued a digital version of the yuan. Since the launch of the e-yuan Beijing has accelerated its crackdowns on crypto payments.

The progress of the eNaira will likely be watched with interest by central banks in both the UK and the European Union. Both the Bank of England and European Central Bank have announced research into issuing a digital currency with the EU claiming that an e-euro could be operational by 2025.

In April the Bank of England and HM Treasury announced the creation of a join Taskforce to coordinate research into a UK CBDC which is ongoing.

Read more: The Digital Currency Crossroads: CBDCs across borders, and the UK approach