{ "title": "Five Observations on Nigeria’s Central Bank Digital Currency", "publication": "IMF News, November 16, 2021", "sourceUrl": "https://www.imf.org/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency", "canonical": "https://www.imf.org/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency", "overlayPath": "/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/index.md", "summary": "

The Central Bank of Nigeria (CBN) officially launched the “eNaira”—a central bank digital currency (CBDC)—on October 25, 2021.

", "authors": [ "Jack Ree IMF African Department November" ], "publishDate": "2021-11-16", "sections": [ { "heading": "Overview and context", "content": "- The Central Bank of Nigeria (CBN) officially launched the “eNaira”—a central bank digital currency (CBDC)—on October 25, 2021.\n- This is the second CBDC fully open to the public after the Bahamas.\n- Author and date: By Jack Ree, IMF African Department, November 16, 2021.\n- The IMF’s Monetary and Capital Markets Department has been involved in the eNaira rollout process, including by providing reviews of the product design." }, { "heading": "What is eNaira?", "content": "- The eNaira is a liability of the CBN, like coins or cash.\n- It uses the same blockchain technology as Bitcoin or Ethereum and is stored in digital wallets.\n- It can be used for payment transactions and transferred digitally at virtually no cost to anyone in the world with an eNaira wallet.\n- Key differences from crypto-assets:\n - The eNaira features stringent access right controls by the central bank.\n - The eNaira is not a financial asset in itself but a digital form of a national currency and draws its value from the physical naira, to which it is pegged at parity." }, { "heading": "Why did Nigeria introduce eNaira? (expected benefits)", "content": "- Increase in financial inclusion:\n - For now, the eNaira wallet is provided only to people with bank accounts, but coverage is expected to eventually expand to anyone with a mobile phone even if they do not have a bank account.\n - A large number of people do not have bank accounts: 38 million people; 36 percent of the adult population.\n - Allowing those with a mobile phone to access the eNaira would increase financial inclusion and facilitate more direct and effective implementation of social transfers programs.\n - It is expected that the move would enable up to 90 percent of population to use the eNaira.\n- Facilitation of remittances:\n - Nigeria’s remittance receipts amounted to $24 billion in 2019.\n - Remittance fees via international money transfer operators typically range from 1 percent to 5 percent of the value of the transaction.\n - The eNaira is expected to lower remittance transfer costs by enabling wallet-to-wallet transfers free of charge when recipients hold eNaira wallets.\n - Exchange rate reforms, including a unified market-clearing rate that reduce the gap between official and parallel market exchange rates, would enhance incentives for using eNaira wallets for remittances.\n- Reduced informality:\n - Nigeria has a large informal economy, with transactions and employment equivalent, respectively, to over half of GDP and 80 percent of employment.\n - The eNaira is account-based and transactions are in principle fully traceable, unlike token-based crypto asset transactions.\n - Wider eNaira adoption may bring greater transparency to informal payments and strengthen the tax base.\n - Informal and formal businesses may benefit if eNaira adoption enhances consumption through greater financial inclusion." }, { "heading": "Potential risks", "content": "- Monetary policy implementation risks, including the possibility that eNaira wallets may be perceived, or effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks.\n- Cybersecurity and operational resilience risks due to reliance on digital technology.\n- Financial integrity and stability risks, including potential use of the eNaira for monetary laundering.\n- Need to monitor macro-financial impacts associated with a central bank digital currency." }, { "heading": "Measures taken by authorities to mitigate risks", "content": "- Limits on transfers from bank deposits to eNaira wallets:\n - Transfer of funds from bank deposits to eNaira wallets is subject to daily transactions and balance limits to mitigate risks of diminishing the roles of banks and other financial institutions.\n- Tiered identity verification and transaction limits:\n - Financial integrity risks are mitigated by using a tiered identity verification system and applying more stringent controls to relatively less verified users.\n - For now only people with a bank verification number can open a wallet, but over time coverage will be expanded to people with registered SIM cards and to those with mobile phones but no ID numbers.\n - Less-verified categories of holders would be subject to tighter transactions and balance limits.\n - Wallet holders who meet the highest identity verification standards cannot hold more than 5 million naira (about $12,200) each in their eNaira wallets.\n- Cybersecurity measures:\n - Regular IT security assessments are expected to be conducted." }, { "heading": "IMF engagement and offers of support", "content": "- The IMF remains available to help with technical assistance and policy advice.\n- The IMF is ready to collaborate with the authorities on:\n - Data analysis\n - Cross-country studies\n - Sharing the eNaira experience with other countries\n - Discussing further evolution of the eNaira including its design, regulatory framework, and other aspects\n- The 2021 IMF Article IV mission emphasized the need for monitoring risks and macro-financial impacts associated with a central bank digital currency.\n- The IMF’s Monetary and Capital Markets Department has been involved in the eNaira rollout process, including by providing reviews of the product design.\n\nSource: Five Observations on Nigeria’s Central Bank Digital Currency (IMF, November 16, 2021)\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- Nigeria’seconomy\n- Making the Digital Money Revolution Work for All\n- A New Era of Digital Money\n- Central Bank Digital Currencies: 4 Questions and Answers\n- Five Questions About Nigeria’s Road to Recovery\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency" } ], "bullets": [ "[Markdown version](/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/index.md)", "[Structured JSON version](/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/index.json)", "[Bundle manifest](/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/bundle-manifest.json)", "Authors: Jack Ree IMF African Department November", "Published: November 16, 2021", "The Central Bank of Nigeria (CBN) officially launched the “eNaira”—a central bank digital currency (CBDC)—on October 25, 2021.", "This is the second CBDC fully open to the public after the Bahamas.", "Author and date: By Jack Ree, IMF African Department, November 16, 2021.", "The IMF’s Monetary and Capital Markets Department has been involved in the eNaira rollout process, including by providing reviews of the product design.", "The eNaira is a liability of the CBN, like coins or cash.", "It uses the same blockchain technology as Bitcoin or Ethereum and is stored in digital wallets.", "It can be used for payment transactions and transferred digitally at virtually no cost to anyone in the world with an eNaira wallet.", "Key differences from crypto-assets:", "Increase in financial inclusion:", "Facilitation of remittances:", "Reduced informality:", "Monetary policy implementation risks, including the possibility that eNaira wallets may be perceived, or effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks.", "Cybersecurity and operational resilience risks due to reliance on digital technology.", "Financial integrity and stability risks, including potential use of the eNaira for monetary laundering.", "Need to monitor macro-financial impacts associated with a central bank digital currency.", "Limits on transfers from bank deposits to eNaira wallets:", "Tiered identity verification and transaction limits:", "Cybersecurity measures:", "The IMF remains available to help with technical assistance and policy advice.", "The IMF is ready to collaborate with the authorities on:", "The 2021 IMF Article IV mission emphasized the need for monitoring risks and macro-financial impacts associated with a central bank digital currency.", "The IMF’s Monetary and Capital Markets Department has been involved in the eNaira rollout process, including by providing reviews of the product design.", "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)", "[PRESS CENTER](http://presscenter.imf.org/)", "[Nigeria’seconomy](https://www.imf.org/en/Countries/NGA)", "[Making the Digital Money Revolution Work for All](https://blogs.imf.org/2021/07/29/making-the-digital-money-revolution-work-for-all/)", "[A New Era of Digital Money](https://www.imf.org/external/pubs/ft/fandd/2021/06/online/digital-money-new-era-adrian-mancini-griffoli.htm)", "[Central Bank Digital Currencies: 4 Questions and Answers](https://blogs.imf.org/2019/12/12/central-bank-digital-currencies-4-questions-and-answers/)", "[Five Questions About Nigeria’s Road to Recovery](https://www.imf.org/en/News/Articles/2021/02/02/na020821-nigerias-road-to-recovery)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/index.md", "json": "/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/index.json", "bundleManifest": "/en/news/articles/2021/11/15/na111621-five-observations-on-nigerias-central-bank-digital-currency/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:45:59.649Z" }