Zambia’s central bank expects to complete research on forming a digital currency that could cut transaction costs and boost participation in the formal financial system by the fourth quarter.
“The results of the research will form part of the input in the policy considerations on whether to introduce a central bank digital currency in Zambia,” Nkatya Kabwe, acting assistant director of communications at the regulator.
A central bank digital currency (CBDC) is a digital form of central bank-backed money and represent money that’s a direct liability of the central bank. Several central banks across the world are experimenting with CBDCs with most of them at very early stages.
Cryptocurrencies are not legal tender in Zambia, the central bank said earlier this month and “people who want to deal in them should have a clear understanding of all the risks that come with such payment and investment instruments.”
The Bank of Zambia is researching on the digital currency as they have the potential to expand financial inclusion, improve traceability, safety and efficiency of payment systems, Kabwe said.
Last year, Nigeria became one of the first countries in the world and the first in Africa to launch its own Central Bank Digital Currency (CBDC) dubbed the eNaira. According to media reports, the eNaira saw over 400,000 new wallets registered with 12,500 transactions worth $113,000 in less than two weeks of launch.
Several other countries have already taken concrete steps or announced their intentions to launch a CBDC in the future. The Bahamas became the first country in the world to publicly avail its own central bank digital currency (CBDC) in October 2020.
Latest reports indicate that a total of 15 countries are in the pilot stages with their own CBDCs, including China,South Korea and Sweden, with about 81 countries in other stages of exploring CBDCs.
However, Analysts at the Bank of America Corp. have warned that central banks that don’t introduce their own digital money risk losing monetary control and seeing the demand for their currencies drop as their citizens start using another country’s digital cash.
