Digital payment systems could undermine monetary sovereignty if poorly regulated , Cardoso warns

thecable.ng · Feb 20, 2026 · Collected from GDELT

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Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), has warned that the rapid expansion of digital cross-border payment systems and stablecoins could weaken monetary sovereignty. Speaking at the 2026 technical group meeting of the Intergovernmental Group of Twenty-Four (G-24) in Abuja on Wednesday, Cardoso said expansion could expose emerging economies to fresh financial vulnerabilities, if not properly regulated. The CBN governor said digital innovation presents opportunities to reduce remittance costs and deepen financial inclusion, but also carries systemic risks for emerging markets and developing economies (EMDEs). “The expansion of private digital payment platforms and stablecoins raises concerns about currency substitution, weakened monetary transmission, increased FX volatility, and capital flow pressures,” he said. “Without coordination, digital cross-border payments risk becoming fragmented across jurisdictions, entrenching dominant currencies and platforms, increasing costs and undermining the ability of EMDEs to safeguard monetary sovereignty.” Cardoso described cross-border payments as the “backbone” of the international monetary system but said current structures remain inefficient for developing countries. The governor said global remittance corridors still cost over 6 percent on average, while settlement delays stretch for days, and compliance burdens exclude micro, small, and medium enterprises (MSMEs) from global trade. “An economy cannot be more inclusive than its payment system,” he said. “If people cannot move money easily, affordably and safely across towns and borders, they cannot fully participate in modern economic life.” Cardoso said modern infrastructure, including interoperable digital platforms, instant payment systems, distributed ledger technology and robust digital identity frameworks, can reduce transaction costs, shorten settlement times and improve transparency. He said Nigeria has taken deliberate steps to modernise its payments ecosystem. In June 2025, the CBN launched the National Payment Stack, a next-generation real-time payment system built on ISO 20022 messaging standards and designed to support multi-currency and cross-border transactions. He said the apex bank has also strengthened anti-money laundering and counter-terrorism financing (AML/CFT) controls in line with the FATF guidelines, including dual screening of cross-border transactions. On diaspora flows, Cardoso said new instruments, including the non-resident Nigerian ordinary account (NRNOA), the non-resident Nigerian investment account (NRNIA), and a non-resident BVN platform, have expanded access for Nigerians abroad. “As a result of these reforms, remittance inflows now average about $600 million per month, and we are confident of reaching a $1 billion monthly milestone in the near term,” he said. PUSH FOR LOCAL CURRENCY TRADE SETTLEMENT Cardoso said digital cross-border systems are enabling local-currency settlement in international trade and reducing dependence on a narrow set of reserve currencies. He cited initiatives such as mBridge and Dunbar, multi-central bank digital currency (CBDC) experiments, as examples of emerging platforms enabling real-time, local-currency settlement. The economist also mentioned Africa’s Pan-African Payment and Settlement System (PAPSS), describing it as a home-grown infrastructure reducing reliance on correspondent banks while supporting intra-African trade under the AfCFTA framework. “These innovations are especially relevant for G-24 countries seeking a more balanced and inclusive global payments architecture,” he said. Cardoso said central banks must lead the digital transition to ensure it strengthens rather than destabilises financial systems. “Our responsibilities include safeguarding monetary and financial stability, modernising payment systems, and anchoring trust,” he said. “The task before us is clear: to shape the future of global finance, rather than be shaped by it.” He added that the “Bretton Woods @ 80” reform discussions present an opportunity to embed payments reform within a cooperative, rules-based international monetary system where developing countries help shape emerging standards. Cardoso said digital cross-border payments “can become a public good and help rebalance global finance and development if central banks shape the architecture rather than adapt to it”.