Nigeria wants to force the use of its CBDC
The Central Bank of Nigeria limits cash withdrawals to a daily maximum of 42 euros in an attempt to boost electronic transactions through the use of its digital currency. Does the global trend to impose the use of central bank-controlled digital currencies, CBDC, endanger our freedoms?
In 2012, the Central Bank of Nigeria introduced new legislation known as “Cash-less Nigeria“. The government argued that it wanted to reduce the amount of physical cash in circulation to boost the modernisation of the payments system, reduce the cost of banking services, promote financial inclusion, improve the effectiveness of monetary policy and boost economic growth.
Since then, daily limits were placed on cash withdrawals and deposits, with charges levied on amounts exceeding the stipulated limits, which have proven to be of questionable effectiveness, to say the least. To date, 63% of transactions in Nigerian POS are still made in cash.
In this context, the Central Bank of Nigeria launched the eNaira digital currency in October 2021 to boost digital transactions. One year later, only 0.5% of the population uses the state-owned digital currency, while, despite the fact that financial institutions are prohibited from trading cryptocurrencies, 35% of Nigerians hold bitcoin, making the country the second-largest BTC market after the United States.
Despite the Nigerian government’s efforts to establish its own digital currency, it seems that the population is reluctant to go cashless, and when they do, they opt for cryptocurrencies outside state control. Growing criticism from citizens and small traders arguing that this legislation was liquidating their businesses has not only been ignored by the political establishment, but the government has announced new measures to further limit cash withdrawals for individuals and businesses.
Total control of our money
What is happening in Nigeria is not unique, Indonesia imposed a blanket ban on cryptocurrency payments in 2017 and is considering making its CBDC the only legal tender. Europe is already testing the digital euro, following a global trend that seems unstoppable and is being followed by country after country. 65% of central banks are developing a digital currency, and are expected to issue their CBDCs within the next 3 years.
On the one hand, governments argue that CBDCs are secure alternatives to cryptocurrencies, facilitating the stability of payment and monetary systems. On the other hand, governments will have unprecedented control over our money, knowing exactly how we spend it and with the ability to stop payments or confiscate it.
For example, the Canadian government responded to the trucker protests during the “freedom convoy”, blocking the current accounts of more than 200 protest supporters. Cryptocurrencies are an alternative to this centralised government control, but as we have seen above, there is a real possibility that they will be banned once CBDCs start operating.
There are warnings from various quarters that the vast power that CBDCs give to public authorities may affect our fundamental freedoms. The fight against money laundering, tax fraud and terrorism is a noble cause to justify central banks’ digital currencies, as long as they do not serve as an excuse to solidify the privileged position of governments to exert more control over their citizens at the expense of their freedoms.
If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.
If you liked this article, we recommend you read:
Risk of legal uncertainty for your savings4 min read
In February, the Canadian government temporarily
The digital euro4 min read
Digital money has come to stay, although for many it is a big unknown.