Emerging markets face forex pressures from private digital currencies — CBN
Orisemeke Benjamin
The Central Bank of Nigeria (CBN) has cautioned that the accelerating growth of private digital payment platforms and stablecoins could pose significant risks to foreign exchange stability and capital flows across emerging markets.
CBN Governor Olayemi Cardoso issued the warning on Thursday while delivering a plenary address at the G-24 Technical Group Meetings in Abuja.
He stressed that although digital financial innovations offer enormous opportunities for financial inclusion and operational efficiency, they also introduce structural vulnerabilities that demand proactive and coordinated regulatory oversight.
“The opportunities of digital payments come with equally significant risks,” he said. “The expansion of private digital payment platforms and stablecoins raises concerns about currency substitution, weakened monetary transmission, increased forex volatility and capital flow pressures, the systemic importance of non-bank payment providers, and regulatory arbitrage.”
According to him, without strong global coordination, cross-border digital payments could become fragmented across jurisdictions, entrench dominant currencies and platforms, reduce interoperability, increase transaction costs, and ultimately undermine the ability of Emerging Market and Developing Economies (EMDEs) to safeguard monetary sovereignty.
Analysts say the warning reflects growing concern among central banks that dollar-backed stablecoins and global fintech platforms could accelerate unofficial dollarisation in fragile economies.
Dr. Olusola Adeola, a Lagos based capital market expert, said the CBN’s concerns are valid, particularly for economies managing exchange rate reforms.
“Emerging markets are still dealing with structural forex imbalances. Introducing unregulated digital instruments into that ecosystem can increase volatility, especially during global shocks,” he said. “Regulatory clarity and cross-border cooperation are critical.”
In her opening remarks, Dr. Iyabo Masha, Director of the G-24 Secretariat, highlighted broader macroeconomic vulnerabilities facing developing countries. She said global growth remains uneven despite pockets of resilience.
“In South Asia, countries like India are driving global growth momentum, supported by strong domestic demand and digital advancements, while Pakistan balances recovery with reform needs,” she said.
Masha observed that across regions, growth lacks the depth needed to deliver inclusive, job-rich transformation, leaving many economies vulnerable to external shocks — including currency and capital flow disruptions.
Nigeria has witnessed a dramatic surge in digital payment adoption in recent years as regulators push financial inclusion and payment system modernisation.
In October 2025, the CBN disclosed that electronic payment transactions climbed to N384 trillion in July 2025, reflecting the scale of digital adoption.
The Nigeria Inter-Bank Settlement System (NIBSS) has also announced plans to explore offline payment solutions to reach underserved Nigerians with limited internet access.
While these developments signal progress, economists warn that rapid innovation without adequate safeguards could create systemic risks.
The G-24, an intergovernmental grouping of 29 developing countries headquartered in Washington, DC, coordinates policy positions on global monetary and financial issues.
African members include Nigeria, South Africa, Ethiopia and Côte d’Ivoire, while Asian and Latin American countries such as India, Pakistan, Brazil and Mexico are also members.
