The International Monetary Fund (IMF) has called on Nigerian authorities to bring stablecoins and other crypto-related activities under formal regulatory supervision as part of broader efforts to safeguard financial stability and strengthen the country’s economic framework.

The recommendation was contained in the IMF’s latest Article IV Consultation report on Nigeria, which was concluded by the Executive Board and subsequently released to the public.

The Fund’s position comes at a time when digital asset adoption continues to accelerate across Nigeria. Growing demand for cross-border payments, inflation hedging opportunities, and retail participation has contributed to the expansion of the country’s crypto ecosystem despite evolving regulatory policies.

In its assessment, the IMF expressed concerns that stablecoins and other crypto assets could create vulnerabilities capable of spilling over into the formal financial system if left outside the scope of effective supervision.

The report stated: “Directors stressed the importance of further strengthening supervision and bringing stablecoin and other crypto-asset activities into the regulatory perimeter.”

The recommendation places digital assets among several key financial stability concerns highlighted by the Fund. Other risks identified include rising non-performing loans, increasing exposure of banks to government debt, and vulnerabilities linked to volatile portfolio investment flows.

Despite these concerns, the IMF acknowledged that Nigeria’s financial system remains broadly resilient. The Fund noted that ongoing bank recapitalisation efforts have strengthened the sector’s capacity to absorb shocks and support economic growth.

However, it warned that regulators must remain vigilant as technological innovation continues to reshape the financial landscape and create new risk channels.

Beyond digital assets, the IMF advised policymakers to maintain a tight and data-driven monetary policy stance until inflation is firmly anchored at sustainable levels. The Fund also expressed support for the Central Bank of Nigeria’s efforts to transition toward a formal inflation-targeting framework.

The report endorsed Nigeria’s flexible exchange rate system while recognising that targeted foreign exchange interventions may still be necessary under certain market conditions.

In addition, the IMF encouraged authorities to gradually reduce dependence on short-term portfolio inflows, citing rollover risks associated with such investments. It also advocated the phased removal of remaining exchange restrictions, capital flow management measures, and multiple currency practices when conditions permit.

On banking sector reforms, the Fund recommended accelerated implementation of Basel III regulatory standards. Key measures highlighted include the introduction of countercyclical capital buffers and stronger liquidity coverage requirements designed to improve financial system resilience.

The IMF also warned that rising non-performing loans and increasing connections between sovereign debt and bank balance sheets require close supervisory monitoring.

According to analysts, the Fund’s recommendations reflect a broader shift toward integrated financial oversight as digital assets increasingly interact with traditional banking systems through payment platforms, fintech companies, and custodial service providers.

The report further emphasized the need for structural reforms capable of supporting inclusive economic growth and diversification. Governance improvements, enhanced security, better electricity supply, agricultural productivity, infrastructure development, and human capital investment were identified as critical priorities.

The IMF also called for improvements in the quality and availability of macroeconomic statistics to strengthen policy formulation and decision-making.

Furthermore, the Fund encouraged policymakers to incorporate climate-related considerations into long-term economic planning, arguing that climate resilience will become increasingly important for sustainable development.

As Nigeria’s digital economy continues to expand, the IMF’s recommendations signal growing international attention on the regulation of emerging financial technologies and their potential implications for economic stability.