February 20, (THEWILL) —The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has warned that the rapid growth of stablecoins and private digital payment platforms could heighten foreign exchange volatility and weaken monetary policy effectiveness in emerging economies.
Cardoso raised the concern while delivering a keynote address at the Group of 24 (G-24) Technical Group meeting held in Abuja.
He noted that while digital innovation has the potential to transform cross-border payments and improve financial inclusion, it also introduces significant macroeconomic risks if left unchecked.
According to him, the increasing adoption of stablecoins digital assets typically pegged to foreign currencies could encourage currency substitution in countries like Nigeria.
This trend, he said, may intensify pressure on the foreign exchange market and complicate efforts by central banks to stabilise their domestic currencies.
Cardoso explained that privately issued digital currencies operating across borders could reduce the effectiveness of monetary policy transmission, particularly in economies that are already vulnerable to capital flow volatility.
He stressed that without coordinated global regulatory standards, stablecoins and other digital payment solutions could create fragmentation within the international financial system and open the door to regulatory arbitrage.
While acknowledging that digital payment innovations can lower remittance costs and enhance transaction speed, the CBN governor emphasised the need for strong governance frameworks to ensure that technological advancement does not undermine monetary sovereignty or financial stability.
He reiterated the apex bank’s commitment to modernising Nigeria’s payments ecosystem, noting recent improvements in remittance inflows and ongoing reforms aimed at strengthening resilience within the financial system.
However, he maintained that innovation must be pursued cautiously, with safeguards capable of mitigating emerging risks in the evolving digital asset landscape.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
