Security News > 2021 > November > Nigeria's central bank digital currency is 'same Naira, more possibilities' – if you count government snooping

There are significant privacy challenges that could make eNaira a lot less attractive.

Identification and authentication can pose additional privacy risks because of their central role in onboarding users to the eNaira wallet and ensuring equal access for all users to meet the financial inclusion aspiration of the CBN. Under the CBN's Circular and Guideline [PDF] on the eNaira issued on 25 October, the national identity number and/or biometric verification number are the unique identifiers for users to "Self-onboard" to the eNaira speed wallet.

Trust is paramount to any payment system; hence robust legal rules and data governance framework is essential to address the risks associated with entities' behaviour and privacy practices within the CBDC ecosystem, including disparate and inconsistent privacy policies.

While a linked digital identity system is considered necessary for CBDC to realise broader social and economic objectives, such as financial inclusion, it is also unclear how users' privacy will be guaranteed under a linked or federated identity system using the NIN and/or the BVN. Nigerian government institutions are notorious for flouting the Nigeria Data Protection Regulation [PDF], the principal regulatory framework for data protection in Nigeria, and the regulation is weak because of its status as subsidiary legislation.

Reports tracking the development of CBDC did not list Nigeria among the top countries with project maturity in either the retail or wholesale CBDC before the launch of the eNaira.

A seeming patchwork of research and policy consultations could invariably overlook the potential market structure effects, technical risks, and rights implications of a CBDC. If the eNaira fails, the CBN will also have to consider possible risks of currency substitution, loss of monetary sovereignty, and a shift in the structure of financial regulation due to disintermediation already indicated by the eNaira.

News URL

https://go.theregister.com/feed/www.theregister.com/2021/11/22/e_naira_legal_privacy/