Central Bank Digital Currency in Nigeria: Opportunities and Risks
12 Pages Posted: 7 Oct 2021 Last revised: 5 May 2022
Date Written: September 5, 2021
Abstract
Nigeria is the first African country to issue a central bank digital currency (CBDC) or fiat digital currency called the eNaira. The eNaira CBDC was issued as a money equivalent to be used alongside with paper Naira. This paper presents the features, opportunities and risks of the central bank digital currency (CBDC) in Nigeria. The opportunities which CBDC present to Nigeria include improved conduct of monetary policy, convenience, efficient payments and increased financial inclusion. Some identified risks include digital illiteracy, increased propensity for cyber-attacks, data theft, and the changing role of banks in a full-fledged CBDC economy. This article contributes to the literature by evaluating the pros and cons of fiat digital currency such as a central bank digital currency.
Keywords: central bank digital currency, eNaira, blockchain, CBN eNaira, cryptocurrency, central bank, CBDC, bitcoin, payment system, fiat digital currency, distributed ledger, Nigeria
JEL Classification: E51, E58, N17, O55
Suggested Citation: Suggested Citation