Regulatory Alerts2025-12-09
NDIC Quarterly Vol 39 No 3&4 2024 – Central Banks’ Digital Currency and the Challenge of Monetary Policy in Nigeria in the First and Second Quarter of 2024
Nigeria's e-Naira, intended to enhance financial inclusion and modernize payments, faces significant adoption hurdles due to low public awareness, merchant apathy, and robust competition from existing digital payment services, as revealed by a recent survey. The digital currency's non-interest-bearing design critically constrains monetary policy flexibility and introduces risks of financial instability, including bank disintermediation and systemic runs, exacerbated by privacy concerns and transaction limits. To overcome these challenges and foster widespread adoption, the Central Bank of Nigeria must urgently re-evaluate the e-Naira's design, implement strong merchant incentives, enhance public trust through transparent communication and balanced privacy features, and strategically partner with private fintech firms.