A very dark experiment is under way in Nigeria, with deadly consequences. Since October 2021, 99.5% of Nigerians have refused to use the central bank's digital currency, the so-called e-Naira, preferring to continue using cash. So what did the central bank do? It doubled down.
In December, the central bank decided to replace all high-denomination cash bills in the economy, just as India did in its disastrous demonetisation campaign of 2016. The goal is to make it much more difficult for Nigerians to use cash. And it's working like a dream/nightmare.
As I've been warning for last two months, Nigeria's already weakened economy is in no position to absorb the resulting economic shock. The central bank is not printing nearly enough cash to replenish the money supply. The result is a massive cash shortage. theguardian.com/world/2023/feb…
As in India, people will die. Businesses are closing. Some will never reopen. Nigerians’ lives have been plunged into chaos. But the country's government and central bank say the pain is worth it. From my latest article on the topic (nakedcapitalism.com/2023/02/this-w…)...
Godwin Emefiele, the CBN governor, has hailed the experiment as a success, as 80% of the cash previously held in private is now deposited with financial institutions. Finance Minister Zainab Ahmed concurred, saying: “The only sore point is the pain it has caused to citizens.”
Why should the rest of the world care? Because unless stopped in its tracks, this monetary experiment is coming to all of us, one way or another. According to the Atlantic Council’s CBDC tracker, 114 countries, representing over 95 percent of global GDP, are exploring a CBDC.
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