Nigeria’s Central Bank Tests Blockchain-Based Forex Settlement Platform

The Central Bank of Nigeria (CBN) has begun testing a blockchain-based foreign exchange (forex) settlement system aimed at modernizing cross-border payments and reducing inefficiencies in the country’s currency market. The pilot project, currently underway with select financial institutions, could mark a turning point in Nigeria’s effort to stabilize the naira and improve liquidity in the official forex window.

According to officials familiar with the trial, the blockchain platform is designed to streamline forex transactions between banks, exporters, and importers while providing greater transparency and traceability. By recording settlements on a distributed ledger, the CBN aims to cut down on delays, curb fraud, and ensure that foreign currency inflows are better tracked across the financial system.

Nigeria has faced persistent forex shortages, a widening gap between the official and parallel market rates, and challenges in attracting foreign investment. Policymakers believe blockchain could help restore confidence by reducing opacity in how dollars are allocated and ensuring that genuine businesses, rather than arbitrage players, gain priority access to scarce forex reserves.

“Blockchain allows us to track inflows and outflows in real time, giving regulators and banks a clearer picture of market dynamics,” a senior CBN official said during a closed-door briefing. “This will support exchange rate stability and help align the official rate more closely with actual market demand.”

The pilot is being tested in partnership with Nigerian commercial banks, as well as select international correspondent banks. Early reports suggest that transactions processed through the blockchain platform settle faster than the existing system, which often requires multiple intermediaries and manual verification.

Industry experts say the initiative could be a game-changer if rolled out nationwide. By digitizing forex settlements, Nigeria could reduce opportunities for round-tripping and speculative trading, which have long distorted its currency market. Moreover, the system could make it easier for the central bank to monitor dollar inflows from exports, diaspora remittances, and foreign direct investment.

However, analysts warn that technology alone may not fix Nigeria’s forex woes. Structural issues, including low oil revenues, declining foreign reserves, and investor concerns about policy unpredictability, continue to weigh heavily on the naira. “Blockchain can improve efficiency, but without restoring investor confidence and boosting forex supply, the pressure on the naira will persist,” noted a Lagos-based economist.

The CBN is expected to run the pilot for several months before deciding whether to implement the system nationwide. If successful, Nigeria would join a growing list of emerging economies experimenting with blockchain-based settlement platforms to strengthen monetary policy and modernize financial infrastructure.

For now, the central bank’s experiment is being closely watched by businesses, traders, and international investors eager to see whether technology can finally bring stability to one of Africa’s most volatile currency markets.