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Central Bank Digital Currency in Nigeria: Opportunities and Risks

In: The New Digital Era: Digitalisation, Emerging Risks and Opportunities

Author

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  • Peterson K. Ozili

Abstract

Purpose: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 along with paper Naira. This chapter identifies the features, opportunities and risks of the CBDC in Nigeria, also known as the eNaira. Method: This chapter uses the discourse analysis method to assess the opportunities and risks of CBDC. Findings: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. Originality:This chapter contributes to the literature by evaluating the pros and cons of fiat digital currency such as a CBDC.

Suggested Citation

  • Peterson K. Ozili, 2022. "Central Bank Digital Currency in Nigeria: Opportunities and Risks," Contemporary Studies in Economic and Financial Analysis, in: The New Digital Era: Digitalisation, Emerging Risks and Opportunities, volume 109, pages 125-133, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:csefzz:s1569-37592022000109a008
    DOI: 10.1108/S1569-37592022000109A008
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    Citations

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    Cited by:

    1. Ozili, Peterson K, 2023. "Using central bank digital currency to achieve the sustainable development goals," MPRA Paper 118806, University Library of Munich, Germany.
    2. Alfar, Abdelrahman J.K. & Kumpamool, Chamaiporn & Nguyen, Dung T.K. & Ahmed, Rizwan, 2023. "The determinants of issuing central bank digital currencies," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Ozili, Peterson K, 2023. "Assessing global and local interest in eNaira CBDC and cryptocurrency information: implications for financial stability," MPRA Paper 116978, University Library of Munich, Germany.
    4. Alora, Aswin & Sahoo, Poonam & Sasidharan, Aghila, 2024. "Central bank digital currency adoption challenges- The case of an emerging nation," Finance Research Letters, Elsevier, vol. 59(C).
    5. Zhang, Runze & Li, Zhijun & Xiao, Chunqu & You, Jiwang, 2023. "New engines of economic growth: How digital currencies lead the way to growth in the era of digital economy," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1597-1617.

    More about this item

    Keywords

    Central bank digital currency; eNaira; blockchain; cryptocurrency; CBDC; Nigeria; E51; E58; N17; O55;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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