In the past few years, central banks have ramped up their research and development work on Central Bank Digital Currencies (CBDC’s). A survey conducted in late 2020 showed that 90% of global central banks are conducting research on CBDCs. The motivation behind this trend is being driven by the digitalization of economies and the growing centrality of data. Data offers opportunities to improve efficiencies.
The African continent has not been immune to this trend. There are over 6 countries on the continent either researching or trialing CBDC’s. The Central Bank of Kenya recently issued a discussion paper assessing the applicability of a Central Bank Digital Currency. Zambia also recently announced its anticipation to finalize its research on creating a CBDC. Similarly, Ghana has announced that it would be partnering with Giesecke+Devrient(G+D). In 2021, the Bank for International Settlements (BIS) announced that it would be leading a project with several central banks, South Africa being one of them. As it stands, Nigeria is the only African country that has launched a CBDC, dubbed the eNaira.
Central Banks are harnessing the technology used in crypto assets to develop CBDC’s. CBDC’s have many benefits for Central Banks that have the potential to result in enhanced financial development and increased financial inclusion. This is crucial in developing economies where a large portion of the population remains financially excluded. CBDC’s also have potential risks if not implemented properly.
Across the world, central banks are starting to see the advantages of Central Bank Digital Currencies (CBDC’s). 90% of central banks in the world are exploring issuing a digital currency, with a growing number of them being on the African continent. As more African central banks explore the feasibility and advantages of Central Bank Digital Currencies (CBDC’s) through trials and research there is a clear need for Pan African collaboration.
The inaugural Algorand-UCT Financial Innovation Hub CBDC workshop brings together representatives from various African Central Banks, leading academics, and representatives from industry to discuss the impact of CBDC’s and ongoing payment innovations. The workshop will have two panel sessions that explore African Central Banks and their Digital Currencies and CBDC’s and ongoing payments innovation.