Violent protests in Nigeria reveal that getting average people to embrace central bank digital currencies (CBDCs) might be more difficult than government officials would like.
Nigerians recently took to the streets to protest a cash shortage caused by government policies adopted in order to push the country into the adoption of its central bank digital currency (CBDC).
Protesters attacked bank ATMs and blocked streets, and demonstrations turned violent in some cities.
According to The Guardian, “Nigeria has been struggling with a shortage in physical cash since the central bank began to swap old bills of the local naira currency for new ones, leading to a shortfall in banknotes.” According to reporting by the news outlet, the protests erupted when bank customers couldn’t access their cash or change old banknotes for new ones. Tensions ratcheted up when the government set a February deadline to change old notes.
The problem is there aren’t enough new banknotes to go around, and that appears to be on purpose. Bloomberg called the policy “demonetization.”
According to the Associated Press, the Central Bank of Nigeria introduced the redesigned notes last fall. The plan was to recover about 85% of the total currency in circulation outside the banking system. The Nigerian central bank said the policy was implemented to remove counterfeit currency from the system and to discourage cash ransom payments to kidnappers and other criminals. But there is an underlying reason for the new policy that The Guardian only mentions in passing.
The policy was also to promote cashless transactions by limiting the use of cash for businesses.”
The AP report also noted that the central bank said the policy would help “make digital payments the norm.”
What these corporate news outlets failed to report is that Central Bank of Nigeria Governor Godwin Emefiele said, “The destination, as far as I am concerned, is to achieve a 100% cashless economy in Nigeria.”
The issue isn’t just the banknote swap. In December, the central bank limited cash withdrawals to 100,000 naira (US$225) per week for individuals and 500,000 naira ($1,123) for businesses….