The Bank of Namibia (BoN) says it has started exploring the establishment of a Central Bank Digital Currency (CDBC) and measures to regulate cryptocurrency.
A CBDC is a digital version of a fiat currency that can be deployed in wholesale and retail models, with the potential to reduce transaction costs and ease cross border transfers while also expanding financial inclusion as people with no banking access can use their mobile phones.
“While this may be a long-term initiative, no time can be spared to start early to gain a thorough understanding of the legal, technical, technological, and social impact it may have on the Namibian economy,” BoN Governor, Johannes !Gawaxab said.
“The Bank is also forming a view on crypto assets while continuing to monitor the impact of this technology. We agree that blockchain technology, the underlying technology that enables crypto assets, is an innovation that can be deployed. Additionally, advances in Fintech are also increasing in the country, and a strategy is necessary to accommodate these emerging players in the market. We can do so by creating an oversight platform, alongside other regulators, to test new products and services in a controlled environment,” he told a BoN Annual Symposium.
The announcement by the BoN Governor comes as the apex bank has put in place a Digital Transformation and Innovation Committee, which is designed to spearhead, and facilitate initiatives in the Bank, with a long-term view to facilitate the same ambitions in the Financial Sector at large.
“We continue to increase our research capacity to study all these rapid developments so that we take informed supportive policy positions ,” he said.
!Gawaxab said the central bank was also investigating instant payment models.
“The Bank is also investigating instant payment models in countries such as Brazil and India for affordable payment infrastructure that can further advance and facilitate financial inclusion. We can learn from our sister Central Banks through close benchmarking initiatives. Cooperation within the SADC community on Regional Payment Systems Integration has grown substantially with the implementation of the SADC Real-Time Gross Settlement systems to facilitate trade within the SADC region,” he said.
What is a Central Bank Digital Currency (CBDC)?
CBDCs are national currencies — unlike their crypto counterparts, such as Bitcoin and Ethereum, which are prized, in part, because they are not tied to fiat currency.
Nigeria last month became the first country in sub-Saharan Africa to fully launch a digital currency, joining China and a few other countries using or piloting central bank-regulated electronic tender.
Five countries have already launched CBDCs, with another 14 including Sweden and South Korea in the pilot stage, according to the Atlantic Council’s CBDC tracking project.
In West Africa, Ghana is also looking to launch its own CBDC soon.
