The Governor of the Central Bank of Nigeria Olayemi Cardoso said the central bank has set up a working group in collaboration with the Ministry of Finance to explore the implications of creating a stablecoin framework in Nigeria.
He disclosed the working group during a press briefing at last week’s Washington DC meetings of the International Monetary Fund (IMF). Noting the discussions on the topic at the meetings he said that “No one wants to stifle innovation, but we must balance it with the risks inherent in new technologies and digital currencies,” according to Business Day Nigeria. While Naira-based stablecoins might provide utility, the reality is some citizens would prefer to hold alternative currencies, such as the dollar.
So, dollar stablecoins are a potential threat to monetary sovereignty. In early June 2023 the Naira suffered a precipitous devaluation, losing 97% of its value during the following nine months. That sort of volatility would encourage savvy consumers to park their money elsewhere. The government blamed the cryptocurrency exchange Binance for its woes and filed a lawsuit to claim almost $80 billion as well as taxes. It notoriously jailed a US Binance executive, but subsequently released him. Chainalysis ranks Nigeria as the second most active country in cryptocurrency adoption.
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