Nigeria Witnesses Rapid Increase in CBDC Transactions Volume

• The Central Bank of Nigeria (CBN) bungled its demonetization program.
• The value of transactions in the country’s CBDC increased by 63%.

Over 13 million e-naira wallets have been installed in Nigeria since October 2022. And the value of transactions in the country’s central bank digital currency (CBDC) increased by 63% to $47.7 million (₦22 billion). In his March 21 address to the local press, Governor Godwin Emefiele also said that the circulation of money has plummeted from more than $6.9 billion (₦3.2 trillion) in September 2022 to roughly $2.2 billion (₦1 trillion).

The Central Bank of Nigeria (CBN) bungled its demonetization program. Thus, leading to a decline in the value of circulating naira banknotes, as previously reported. The central bank of Nigeria allowed citizens a grace period of a few months. In order to turn in their old 200, 500, and 1,000 naira banknotes. After it announced its intention to circulate newer-designed banknotes.

More Than 4 Million e-Naira Wallets

Violent demonstrations erupted and a call for an extension of the deadline was made. Because of the perceived short repatriation time and the CBN’s inability to deliver sufficient banknotes of the newly designed naira. As the Supreme Court of Nigeria issued a ruling against demonetization. The Central Bank of Nigeria (CBN) reversed course. And announced that the demonetized banknotes will once again be legal money until the end of the year.

Several Nigerian pundits have speculated that the recent uptick in the value of e-naira transactions is due to the scarcity of both new and old naira banknotes, notwithstanding the CBN’s policy reversal.

However, a Bloomberg report cites Emefiele as saying that the Nigerian government’s use of the CBDC to send funds to deprived areas is to blame for the rise in e-naira transactions. More than 4 million e-naira wallets, he said, were created as a direct consequence.