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Zambia's Central Bank to Explore CBDC Following Crypto Warning: Report
The Bank of Zambia wants to cut transaction costs and increase citizens' participation in the formal financial system.
Updated May 11, 2023, 6:36 p.m. Published Feb 9, 2022, 3:42 p.m.
Zambia, in common with several neighboring countries, is exploring a potential central bank digital currency (CBDC) and expects to complete its research later this year, according to a Bloomberg report Wednesday.
The Bank of Zambia aims to cut transaction costs and increase citizens' participation in the formal financial system, Bloomberg said.
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The news follows shortly after the central bank issued a warning on the use of cryptocurrencies, saying “people who want to deal in them should have a clear understanding of all the risks that come with such payment and investment instruments,” according to Bloomberg.
This strongly echoes the rhetoric of the central bank in Zambia's neighbor to the south, Zimbabwe. "As a central bank we don't believe in cryptocurrencies," Reserve Bank of Zimbabwe Governor John Mangudya said in December. Zimbabwe is also exploring the development of a CBDC and plans to send a team to research the experience of Nigeria, where one was launched in October.
Some 100 countries are researching the possibilities of developing a CBDC, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said in a speech today.
The motivation is in part out of concern that they will see demand for their fiat currencies drop should citizens use CBDCs from other countries or, indeed, a private cryptocurrency. Developing nations with often unstable fiat currencies are more prone to this risk than most, hence the widespread interest in developing CBDCs.
Read more: CBDCs for the People? Where the Current State of Digital Currency Research Leads
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