In Nigeria, citizens have taken to the streets to protest the nation’s cash shortage, further objecting to their government’s implementation of a central bank digital currency (CBDC), writes Nicholas Anthony, at Coindesk. The shortage came about due to cash restrictions aimed at pushing the country into a 100% cashless economy. Yet, instead of adopting the CBDC, Nigerian protesters are demanding paper money be restored.
The country’s experience strongly suggests the average citizen understands that CBDCs present a substantial risk to financial freedom while providing no unique benefit.
It is no secret that CBDCs have been growing in popularity among central bankers, policy makers, and consultancy firms in recent years. Yet, for citizens it’s been another story. When the US Federal Reserve solicited comments on CBDCs, more than two-thirds of the commenters were concerned about the risks to financial privacy, financial freedom and the stability of the banking system.
Further, CBDCs really don’t add anything novel to the market in terms of benefits for consumers. To the extent people want it, many currencies are available in digital forms through debit cards, payment apps and even prepaid cards. That much should be clear from the abysmal adoption rate in Nigeria, where less than 0.5 % of Nigerians have used the CBDC. To put that number into perspective, more than 50% of Nigerians have used cryptocurrency.
The Nigerian government has unleashed a flurry of tricks to spur adoption but none has proven effective. To its credit, the Nigerian government initially tried to encourage use through modest measures. In August 2022, it removed access restrictions so that bank accounts were no longer required to use the CBDC. Then, in October, it offered discounts if people used the CBDC to pay for cabs.
Yet, neither effort proved to be fruitful. Put simply, Nigerians prefer cash.