This is just a personal opinion, because I am not an expert in economic matters; I am just a freelance analyst of the Naira currency trend . The idea is to stop the free fall (devaluation) of the naira.

First, I will say the Central Bank of Nigeria (CBN) has been proactive. In the immediate past administration, it proposed many policies towards the stabilisation of the naira. My concept towards the stabilisation of the naira will be based on an existing framework from the CBN—using the E-Naira .

Note: E-Naira is a digital currency. It is not a cryptocurrency. Hence, we should use a stable value.

Thus, my proposed solution is "The Managed E-Naira Value Chain System."

So, let's dive in:

1. Following this concept, the CBN will create a digital platform (software, app, web, mobile) where only the CBN sells the E-Naira.

2. The CBN will only sell E-Naira to BDCs and IMTOs.

Now this is where it gets interesting:

3a. Instead of selling dollars to BDCs, the CBN will sell E-Naira to BDCs, while BDCs buy E-Naira from the CBN with dollars.

3b. IMTOs will have to get hard currencies from their customers and exchange/flip the hard currency to E-Naira, which can only be obtained from the CBN. This means IMTOs, too, will not be allowed to exchange e-currencies for Naira directly. E-Naira will be adopted for FX transactions through IMTOs and BDCs.

3c. Now, for this concept to work, the operators (buyers of E-Naira) will be regulated by the CBN (only IMTOs and BDCs should be allowed to buy E-Naira). Also, the exchange rate (value of dollars to E-Naira) will have to be regulated or managed by the CBN.

4. The CBN will have to reintroduce Form A and Form M for people to fill in for dollar requests since dollars will no longer be available for purchase from BDCs (BDCs will be using dollars to purchase E-Naira). BDCs will get dollars/hard currencies from customers while using the dollars to purchase e-naira from the CBN.

4b. Filling out Forms A and M will help weed out currency hoarders since requests for important FX will only be granted. Moreover, even if they lie, they can only change the dollars through a bank (directly to Naira) or BDC (via E-Naira).

5. When a customer brings hard currency to a BDC for exchange, the BDC will collect the dollar and send an equivalent amount of E-Naira to the customer's e-wallet. E-Naira can only be exchanged for Naira on the CBN E-Naira app.

6. Also, customers of commercial banks will be allowed to exchange [physical] hard currencies for Naira without going through the hassle of the CBN E-Naira wallet.

7. Commercial banks will not be allowed to sell e-currencies to BDCs. Instead, the commercial bank will give a monthly account of the dollars in its coffers. With the total amount of dollars in the banks, dollars received from IMTOs, and dollars from BDCs, the CBN can plan how to give dollars to people who need them (they filled out Forms A and M). This will help weed out currency hoarders.

N.B: Check the table below for an illustration of this concept....

How to deal with non-compliance in BDCs and IMTOs:
8a. E-Naira should be restricted to BDCs, IMTOs, and their customers using a CBN E-Naira app.

8b. A BDC shall only be in operation if it consistently purchases E-Naira from the CBN.

8c. IMTOs too must be mandated to purchase E-Naira if they must deal in naira. Any IMTO not willing to purchase E-Naira (with dollars) should stop dealing in the Naira.

8d. The CBN should monitor the accounts of every authorised BDC. Any BDC that does not purchase E-Naira in 2–3 months should lose its license or be suspended.

8e. IMTOs should allow people to exchange their hard currencies for E-Naira, which the customers will convert to Naira on the CBN E-Naira app. Banks should not be allowed to exchange, buy, or sell E-Naira. It will only be made possible on the CBN E-Naira app.

How this will stabilise the exchange rate:
9a. Remember that IMTOs and BDCs are buying E-Naira with dollars? They are also only selling E-Naira to customers (since they must use dollars to get E-Naira if they still want to be in operations).

9b. So, if a BDC pays a customer N1,700.00 for $1.00 since the BDC will purchase $1.00 worth of E-Naira for N1,300.00 from CBN, the BDC will make a loss of N400.00 per dollar.

9c. Also, if a BDC increases the price of its E-Naira from N1350.00 to, let's say, N1800.00, the customer will not buy because they will only be able to exchange it for N1,350.00 on the CBN E-Naira app. The customer also suffers a loss.

How this helps the bank:
10a. This means banking apps can convert FX earnings directly to Naira. Many would prefer to exchange directly to Naira without going through the hassle of E-Naira.

10b. IMTOs can use the CBN E-Naira app API to determine the volume of dollars needed to purchase an equivalent amount of E-Naira when a customer requests an exchange.

10c. Otherwise, an IMTO shall determine the average monthly volume of dollars flipped/exchanged for naira on its platform. An equivalent amount of E-naira shall be purchased monthly by IMTOs exchanging dollars for E-Naira.

How this tackles round-trips:
11a. Dollars obtained from outside the banking system will be brought back into the banking system.

11b. Using the Form A and Form M concepts, dollars will no longer be sold/given to individuals. However, the CBN will use a managed lending model for dollar buyers. Where dollar buyers in Nigeria must have a blocked account [more on this].

11c. Also, hard currencies will not be given in cash to people who own domiciliary accounts. They can use cards, transfer, etc. But for withdrawals, they either convert directly to Naira (through banks) or use E-Naira (through BDCs/CBN E-Naira app).

12. This is just a brief introduction to the concept, as further approaches, information, and references will be discussed with policymakers.

Summary
CBN should stop selling dollars to banks and BDCs. Instead, it should buy dollars from them at a controlled price. Anyone who needs dollars should get Form A and Form M from the CBN by applying through commercial banks.

Ok