In October 2021, Nigeria became the third country globally to launch a central bank digital currency (CBDC)—the eNaira. It came as a shock, given that most other countries are still trying to figure out this new technology and its impacts.
To be fair, though, the idea of moving central bank cash to a digital format is not new. As early as 1987, James Tobin, a professor at Yale, suggested that we create accounts that would sit directly with central banks instead of commercial banks. Note the difference between this digital cash and your current or savings account, which requires a private-sector bank to operate.
Despite the idea of digital cash being around for a while, nobody took it seriously. Banks were doing their jobs fairly well—why shake what wasn’t broken?
Until…the financial crisis in 2008. Banks made terrible moves that broke the financial system and took the global economy down with it—millions lost their jobs. It was a wake-up call, not just to policymakers but to everyday people. Banks weren’t as safe and diligent as we once thought.
Notably, this crisis happened under the