What does the BRI report say about the development of CBDCs in Africa?

What does the BRI report say about the development of CBDCs in Africa?

The Bank for International Settlements (BIS) conducted a survey of nineteen central banks in Africa. In doing so, he took a closer look at the development of Central Bank Digital Currencies (CBDCs) on the continent.

The results of the survey were compiled into a 23-page document. The same analyzed the development, motivations and challenges of power plants banking digital currencies (CBDC) in Africa compared to other emerging and developing regions.

Mobile money rivals CBDCs

The report published by the BRI identified mobile money as a major rival to CBDCs in Africa. He read,

“Mobile money – i.e. digital payments through a mobile phone that does not require a bank account – began the transformation around the turn of the century, with African countries like Kenya at the forefront.”

In fact, sub-Saharan Africa accounts for two-thirds of mobile money transactions by volume and more than half of active users globally.

That said, African central banks believe that CBDCs will provide greater utility for the implementation of monetary policy. Nearly half of banks said the main driver for the introduction of CBDCs is the provision of liquidity. Adopting CBDCs will help them reduce printing costs and expenses incurred while transporting and storing banknotes and coins.

Challenges associated with CBDCs

According to the survey conducted by the BIS, cross-border spillovers and cybersecurity risks are major concerns for central banks exploring digitized currencies. These central banks are also concerned about the heavy operational costs associated with adopting this technology.

In the face of these challenges, the report concluded that African CBDCs should be tailored to the unique needs of the continent. These include the cost and access associated with CBDCs and their interoperability with credit cards, mobile money, and other FPS and KYC formalities.

IMF Calls For Stricter Crypto Regulation In Africa

Earlier this week, the International Monetary Fund released a report, one that concluded that African crypto markets need more regulation. The African crypto market is one of the fastest growing markets in the world.

Another reason for this IMF statement is the collapse of FTX. According to its report, the implosion of the Bahamas-based exchange has only reiterated the need for crypto-regulation. This was done in the interest of consumer protection.

The report concludes,

“Policymakers are also concerned that cryptocurrencies could be used to illegally transfer funds out of the region and to circumvent local rules to prevent capital outflows. The widespread use of crypto could also undermine the effectiveness of monetary policy, creating risks to financial and macroeconomic stability.

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