Nigeria turns bullish on CBDC use and bans monthly ATM withdrawals above $225

Nigeria officially launched its central bank digital currency (CBDC) dubbed eNaira earlier this year. The Nigerian government has now banned weekly ATM withdrawals over $225 (roughly Rs. 18,565) to encourage the use of its CBDC among the masses. On a daily basis, ATM withdrawals in the African nation have been capped at $45 (about Rs. 3,710). Nigeria is one of the first nations in the world to fully adopt its CBDC. Nations like China and India are still testing their respective national digital currencies.

Nigeria wants to add the advanced tech twist to its existing financial systems. Along with promoting the use of eNairathe government is also urging people to use online payments and mobile banking.

“Customers should be encouraged to use alternative channels (internet banking, mobile banking apps, cards, eNaira, etc.) for their banking transactions,” the Nigerian government said in a statement official statement.

Built on the Blockchain Technology, CBDCs work like cryptocurrencies, but unlike the largely untraceable and independent crypto transactions, CBDCs are issued and regulated by central banks.

Essentially, CBDCs are the virtual representation of fiat currencies, but due to the use of blockchain, the track records of CBDC transactions are more transparent and immutable compared to traditional online transactions.

The Nigerian government is aiming to get over eight million people to adopt eNaira as a payment method in the coming months, details were announced in August by Godwin Emefieldthe governor of the Nigerian central bank.

The eNaira was launched on October 25th. The CBDC recorded over 840,000 downloads in over 270,000 active wallets in the first few weeks after its launch.

Up until two months ago, around 200,000 transactions worth over US$9.5 million (around Rs.75 billion) were recorded on eNaira.

In an effort to expand the use cases of the eNaira, the government there is also trying to make people pay for theirs utility bills and ticket bookings through the CBDC.

The country plans to use CBDC as a tool to bring unbanked citizens into the financial system.