Nigeria has been listed as one of the top 3 countries in the world where Central Bank Digital Currency (CBDC) has gained momentum as 44 other countries are starting their pilot phase.
According to a report published on Tuesday by the U.S.-based Atlantic Council, as of September 2024, only the Bahamas, Jamaica, and Nigeria have fully launched a CBDC.
“In Nigeria and the Bahamas, CBDC issuance has increased substantially,” the report noted.
Recall that the Central Bank of Nigeria (CBN) launched the country’s CBDC, eNaira in October 2021.
With that, Nigeria became the first African country to launch a CBDC and second in the world after the Bahamas which launched “Sand Dollar”, in October 2020.
CBDCs in the pilot phase
The report showed that 134 countries and currency unions, representing 98% of global GDP, are currently exploring a CBDC.
“In May 2020 that number was only 35. Currently, 66 countries are in the advanced phase of exploration—development, pilot, or launch,” the report stated.
“There is a new high of 44 ongoing CBDC pilots, including the digital euro. European countries, both in the euro area and beyond, are increasingly testing wholesale CBDCs, both domestically and across borders,” it added.
In addition, the Atlantic Council noted that all original BRICS member states—Brazil, Russia, India, China, and South Africa—are piloting a CBDC.
- Since last year, BRICS has actively promoted the development of an alternate payment system to the dollar.
- According to the report, China which is running the world’s largest pilot scheme, has seen the use of its prototype e-CNY nearly quadruple to 7 trillion yuan ($987 billion) of transactions.
- Other big advances have been the European Central Bank’s launch of a multi-year digital euro-pilot and the United States, which has long dragged its feet on a digital dollar, joining a cross-border CBDC project with six other major central banks.
What you should know
A Central Bank Digital Currency (CBDC) is the digital form of a country’s fiat currency that is also a claim on the central bank. Instead of printing money, the central bank issues electronic coins or accounts backed by the full faith and credit of the government.
- Nigeria launched the eNaira in October 2021, and it became the world’s second CBDC to be launched. However, the eNaira has struggled with adoption, even following devastating cash shortages and a recent spat over Binance’s operations in the country.
- The IMF, in a report reflecting on the first year of the eNaira’s launch, noted that the digital currency had 24/7 uptime but struggled with “disappointingly low” public adoption, with only 1.5% of wallets engaging in transactions weekly.
- Meanwhile, the CBN earlier this year signed a Memorandum of Understanding (MoU) with a blockchain firm, Gluwa to drive the increased adoption of the eNaira.
- According to a statement from the blockchain firm, the partnership’s core objective was to harness the power of blockchain technology to enhance financial inclusion, improve eNaira functionality, and foster financial innovation.
- By becoming the CBN’s official Partner Agent, Gluwa will integrate its Credal blockchain innovation directly with eNaira, as a first step towards deepened collaboration.
