Nigeria had launched its CBDC last month and though it has received some warm welcome from the people of the country, eNaira is expected to suffer from the trust issues that the people have with the government.
It is indeed ironical that the trust issues are more to do with the people and the government rather than the concept of a CBDC or the technology involved. It is expected that this will continue to be the case when the CBDCs are launched by the various governments across the wold in due course of time and the governments have to give serious thought about this issue before they introduce the same. There is widespread fear that the eNaira would be used by the government to track each and every financial transaction in a simple manner and then the government might go ahead and block certain transactions or accounts or wallets as well. This is not good for the ecosystem and the CBDCs are expected to give more power back to the people and not bring in even more control from the government or the central bank or any other intermediary for that matter.
While the central banks in many countries are busy regulating the private cryptos and testing out the technology challenges involving CBDCs, they would also do well to think about the ethical and governance challenges that they are likely to face. Though it is reported that over 350,000 wallets have been created with several thousand transactions being made over the last few weeks on the eNaira, widespread adoption is likely to happen over the long term only if such issues are answered and taken care of. Nigeria has been one of the first large countries to introduce the CBDC and it is believed that the Chinese government would also face a similar ethical challenge when it chooses to introduce its own version of the CBDC.
It is only in such circumstances that a clash between the private stablecoins and the CBDCs is expected and only then will we know what the reaction of the central banks to such challenges would be. China has gone ahead with its plans to ban all crypto beore introducing its own CBDC but whether this is the right approach is something that only time will tell.
