Nigeria Restricts Cash to Push Central Bank Digital Currency

Nicholas AnthonyFaced with dismal adoption rates of its central bank digital currency (CBDC), the Central Bank of Nigeria hasrestricted cash withdrawals to push citizens into using its CBDC. Unfortunately, restrictions on (and the eventual elimination of) cash are just one of the risks that Norbert Michel and I  warned about ina  paper we published in November.Nigeria launched its CBDC (the eNaira) in the fall of 2021, but few Nigerians have been eager to use it. Current estimates suggestless than 0.5 percent of Nigerians are using the CBDC. To put that number into perspective,more than 50 percent of Nigerians use cryptocurrency.When it comes to increasing the popularity of a  product, the private sector usually only has so many options. For instance, the product itself could be improved or the price could be discounted. To their credit, the Central Bank of Nigeria tried both options. In August, the CBDC program was changed so that Nigerians no longer had to have bank a ccounts to use the CBDC—a bid to attractthe 55 percent of adults that are unbanked. And then in October, the central bank offered a  5  percent discount for taxi payments in an effort to “discount the price” of using the CBDC.Yet governments have a  few privileges that ordinary businesses do not. Namely, they can “increase adoption” by establishing legal barriers to hinder alternatives or outright prohibit those alternatives. The Central Bank of Nigeria already took steps toprohibit cryptocurre...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs