Today the International Monetary Fund (IMF) published a blog post about the significant adoption of stablecoins for cross border payments in Nigeria, showing that the country has attracted around 60% of stablecoin inflows in sub-Saharan Africa since 2019. While the IMF proposes policy responses, the Central Bank of Nigeria (CBN) recently published its Payment System Vision for 2028, which has some overlap, but also looks to revive its eNaira CBDC and encourage its use for cross border payments.
Geographic measurement of stablecoin flows has historically been tricky. Nonetheless, using Chainalysis data, the IMF estimates that in the year to June 2024, the country received $59 billion in incoming crypto-assets, including stablecoins. It highlights potential issues, including payments moving outside of regulated avenues such as banks, effectively encouraging black market activity, although it did not use that terminology. Separately, the CBN described the same challenge as “limited integration of diaspora liquidity into formal markets.” Additionally, digital dollarization can have a negative impact on monetary policy. On the positive side, stablecoins reduce the cost of international payments and could encourage trade.
Crypto natives are often dismissive of monetary sovereignty issues, saying that if foreign economies are better managed then digital dollars would not be quite so attractive. In a more diplomatic manner, the IMF is saying the same thing, with its first policy proposal being to “safeguard monetary stability”. Other recommendations include regulating stablecoins, getting data for better visibility into what is happening, and upgrading payments to fill the gaps that stablecoins are filling. The IMF made no direct mention of the eNaira launched in 2021, which it previously noted has not gained much traction.
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