Nigeria, Africa’s most populous nation and largest economy, is currently facing a financial crisis that has underscored the importance of cryptocurrencies for its population of over 219 million.
Despite the government’s launch of a central bank digital currency (CBDC), the eNaira, citizens have shown little interest and have instead turned to mainstream crypto assets, despite a ban on their use.
The central bank’s new policy and its effects
Last October, the Central Bank of Nigeria (CBN), the country’s apex bank, deklare the redesign of the most widely circulated denominations of the naira, specifically the 200, 500, and 1,000 cash notes. The CBN urged the public to deposit their old notes at the various banks throughout the country before Jan. 31, after which they would no longer be considered legal tender.
Despite the deadline being extended to Feb. 10, the shortage of new naira notes has led to a financial crisis in the country. This is because the central bank reportedly released only 500 billion naira into circulation, as opposed to the required 3 trillion naira. Consequently, most banks were still dispensing the old notes to their customers in the few days leading up to the deadline, according to the local outlet, Kablo.
Pandemonium erupted, with businesses rejecting the old notes to avoid having them in possession when they are eventually declared invalid. Amid the ensuing financial crisis, a group of several state stakeholders sürüklenen the Federal Government and the CBN to the country’s Supreme Court, seeking an extension of the deadline.
Following a hearing on the matter, the Supreme Court ordered that the deadline be suspended and the old notes allowed to remain as legal tender. Nonetheless, the Federal Government has not obeyed the order, mandating the CBN to keep to its deadline.
As the deadline inched closer, banks were later prohibited from swapping banknotes. Furthermore, owing to the scarcity of the new notes, the CBN directed Nigerians to head to its branches across the country and deposit their old cash to their bank accounts without receiving the new notes, leaving them with no hard money and presenting digital payments as the only option available.
With the deadline approaching, the old notes are no longer considered legal tender, as banks and businesses are now rejecting them, several people familiar with the matter told crypto.news. The Federal Government only ordered the CBN to reissue and recirculate the old 200 naira notes until April 10. The government insists that the recent policy is aimed at rendering stored-up cash by bandits and kidnappers useless, imploring Nigerians to bear with the situation, according to the sources.
Source: https://crypto.news/nigeria-tries-to-enforce-cashless-society-with-cbdc-enaira-amidst-financial-disaster/