The race for Central Bank Digital Currency (CBDC) is intensifying all over the world as leading apex banks continue to work on setting up the systems needed to fully establish digital money.
China is already testing the waters with a digital renminbi variant that allows customers to make payments via their mobile phones.
Europe has also announced a five-year plan involving the launch of a digital Euro. The United States Federal Reserve Bank (Fed) is in the process of releasing a public discussion paper regarding the digital payment system.
Africa isn’t left out of the race as two major players (Ghana and Nigeria) on the continent are also in the race for Africa’s first CBDC. The possibilities are endless as far as the impact of successful digital currencies goes since both countries are party to the recently brokered African Continental Free Trade Area (“AfCFTA”).
Africa’s largest economy Nigeria, through the governor of its apex lender, Mr. Godwin Emefiele, issued a public pronouncement on July 27, 2021, detailing the launch of the pilot phase of the Nigerian CBDC (e-Naira). The launch is scheduled for October.
Ghana, home to the AfCFTA Secretariat, appears to be ahead in the race, as the West African country announced that its CBDC (e-Cedi) will launch in September 2021. Ghana made it clear that it is determined when it announced a partnership with German payment services provider, Giesecke+Devrient.
Apart from the craving to win a race, analysts are already discussing a more important topic, what the success of a digital currency means for the continent as a whole, especially for its AfCFTA.
Will it boost the ease of payment and settlement of transactions under the new trade regime? Will it address the challenges of remittances on the continent? On what blockchain will the CBDC run – Bitcoin-type blockchain or Hyperledger Fabric blockchain? Will it be wholesale CBDC or retail CBDC or a hybrid?
Other concerns revolve around the issue of adoption and its relevance in maintaining stability in fiscal and monetary regimes.
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