Nearly 18 months after introducing its national CBDC in the midst of a severe cash crisis, Nigeria has seen a rise in CBDC acceptance. Transactions in eNaira now have a value of 22 billion nairas, or $47.2 million.
Nearly 18 months after its inception, Nigeria's Central Bank Digital Currency [CBDC] usage is on the rise as the country struggles with a lack of fiat reserves. Nigeria's cash shortage is the result of the central bank's decision to switch out smaller denomination notes with larger ones due to inflation. Although developing nations were among the first to see the advantages of a CBDC, the idea has not yet been implemented in most places.
The present cash problem is also a result of the local political environment and other macroeconomic factors. The redesign of the naira has undoubtedly exacerbated the present economic crisis and increased pressure on the unbanked. Nigerians are dealing with a scarcity of freshly redesigned naira and record-high inflation of 21%.
Additionally, eNaira rewards in government projects and social programs encourage the use of CBDC.
Can CBDCs help in a time of financial need? According to a Bloomberg story, Nigerians are obliged to utilize the eNaira due to a scarcity of actual currency. The value of eNaira transactions has increased by 63% to 22 billion naira in a nation where cash still represents around 90% of transactions.
According to Godwin Emefiele, the governor of the Central Bank, the number of CBDC wallets increased by more than 12 times since October 2022. Emefiele declared:
"The eNaira has emerged as the preferred electronic payment method for implementing social interventions"
CBDCs assert to offer a solution for developing nations to overcome the problems brought on by the fiat economy. Only 11 nations, according to the Atlantic Council, now have their own CBDCs. The remaining CBDCs are tiny island states in the Caribbean, with Nigeria being the largest of these.
This latest update on CBDC in Nigeria will also affect crypto regulation.
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