Evolution of money from barter system of exchange to Central Bank Digital Currency (CBDC): A focus on Nigeria and the Bahama

Abstract

Money as a medium of exchange, store of value, and unit of account has played a significant role in every sphere of human existence and within every discipline, whether it is the Central Bank of Nigeria's increase to the country's money supply or deposit-taking commercial banks in the Bahamas's dividend payout ratio, money has been a substantial element that links both micro and macroeconomics in the financial system of every economy. However, influenced by technological advancement, digital financial innovations, cryptography, and networking the concept of Money has changed significantly and frequently over the centuries from the Barter exchange system in the 6000 BC to the Central Bank digital currency (CBDC) in 2020. The main purpose of this paper is to elucidate the evolution of Money from a barter system of exchange to the Central Bank Digital Currency (CBDC). On the basis of a qualitative review of available literature surveyed, the study result revealed that technological advancements, financial innovation, lack of public confidence in traditional financial institutions and regulatory authorities, financial crisis, competition, and financial inclusion are closely associated with the evolution of Money from a barter system of exchange to CBDC in Nigeria
and Bahamas. However, the study concludes that each phase of the evolution of Money from the barter system to CBDC is based solely on trust. Trust is significantly connected to every phase of the evolution of Money to CBDC. Hence, anyone can create coins, fiat currency, cryptocurrency, or CBDC as a medium exchange, but getting it accepted as a payment system is based solely on trust. Therefore, the evolution of Money and public confidence in the medium of exchange coexist.