IMF: Nine Out Of Thirteen African Countries In Research Stage Of CBDCs Execution

• Various countries globally are making CBDCs a major part of discussions.

• A lot of African countries are at various stages of establishing a CBDC. 

• The South African Reserve Bank is experimenting with a wholesale CBDC, while the Bank of Ghana is experimenting with a retail CBDC. 

Central Bank Digital Currencies (CBDCs), have become quite popular following all the concerns and skepticisms around the cryptocurrencies. A lot of countries have been constantly thinking about setting up their own CBDC, while some have already done so. But here is a continent that is fast moving towards the concept. 

The International Monetary Fund (IMF) has recently highlighted some statistics and the status of 13 African countries that are at several stages of either deploying, piloting, or already utilizing Central Bank Digital Currencies (CBDCs). 

CBDCs are basically a virtual twin of fiat that is not only more secure but is less volatile too when compared to crypto assets. The only factor that might not attract the decentralization enthusiasts is that they are wholly issued and regulated by the central banks. 

According to the IMF chart, which shows the countries’ current stance on CBDCs, Ghana, South Africa, and Eswatini are the countries at the piloting stage. While Nigeria has already deployed the concept. 

Whereas if we talk about the ones at the research stage, they are Madagascar, Zimbabwe, Uganda, Rwanda, Mauritius, Zambia, Tanzania, Namibia, and Kenya. 

The South African Reserve Bank is also experimenting with a wholesale Central Bank Digital Currency (CBDC), that can specifically be utilized by the financial entities for interbank transfers. This is the second phase of its Project Khokha. 

Furthermore, the country is also taking part in a cross-border pilot with the central banks of Malaysia, Australia, and Singapore. 

Unlike the South African Reserve Bank, The Bank of Ghana is experimenting with a retail CBDC (or general-purpose CBDC), e-Cedi can be used by the folks with the help of a digital wallet app or a contactless smart card that can be utilized offline. 

Though the International Monetary Fund (IMF) also signifies that the governments would be required to enhance the access to digital infrastructure like mobile phones, internet connectivity, etc. 

And that the central banks would highly need to work on their technical potentials and expertise to deal with the concerns of data privacy, comprising possible cyber attacks, financial integrity, etc. 

Though these are just the risks we count on our fingers, there can be more problems and implementation of any new technology in a vast system like that of finance like how it would impact the private sector for digital payment services. 

This was about African countries, other countries like Qatar are also researching them. And a global economy like the US is still giving thoughts on it. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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