Central Bank Digital Currency in Nigeria: Opportunities and Risks

Abstract

Nigeria is the first African country to issue a central bank digital currency (CBDC) or fiat digital currency. The eNaira CBDC was issued as a money equivalent to be used alongside with paper Naira. This paper identifies the features, opportunities and risks of the central bank digital currency (CBDC) in Nigeria, also known as the eNaira. The opportunities which CBDC present to Nigeria include improved monetary policy transmission, 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.