Central Bank of Nigeria: eNaira no threat to financial stability

The Central Bank of Nigeria (CBN) had to publicly insist that its eNaira project — one of the world’s first operating central bank digital currencies (CBDC) — doesn’t threaten the country’s financial stability. 

The press release from the CBN came out on Oct. 9 in response to “news items on some media platforms,” suggesting that the eNaira threatens Nigeria’s financial stability. Some news pieces — for example, the one published in a daily Nigerian newspaper, Punch, point to the CBN’s recently released report called “Economics of Digital Currencies: A Book of Readings.”

In this report, CBN experts highlight the gradual rise of eNaira adoption, marked by 0.2% share if compared to Nigerian banks’ liquidity. They also admit the simple fact that the funds held by citizens in the eNaira wallets can’t be used by commercial banks. The very hypothetical threat that could arise from this observation is the lack of liquidity suffered by the banks in the case of total adoption of eNaira. However, such fear is one of the fundamental theoretical aspects of the discussion about any CBDC.

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In its release, CBN doesn’t do much explaining, limiting itself to a plain rejection of the claims in the media and referring to the “in-depth understanding of CBDCs” ingrained in its report:

“The eNaira structure continues to evolve and undergo modifications targeted at improving the user experience across all interfaces. We encourage Nigerians to embrace the technology for, amongst other things, greater financial inclusion.”

A recent global survey featuring respondents from 15 countries indicates that Nigeria has the most cryptocurrency-aware population in the world. According to a joint study by ConsenSys and YouGov, 99% of Nigerians are more knowledgeable about Web3 than people in major economies like the United Kingdom, the United States, Japan and Germany.

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