The Bank of Namibia is considering a CBDC to improve cross-border payments and boost financial inclusion. A recent IMF mission advised against a swift launch, suggesting an enhancement of current payment systems. The BoN is actively engaging with regional central banks to assess the feasibility of a CBDC and is refining its approach based on IMF recommendations.
The Bank of Namibia (BoN) is currently evaluating the introduction of a central bank digital currency (CBDC) to facilitate cross-border payments and enhance financial inclusion. This exploration follows a recent technical assistance mission by the International Monetary Fund (IMF), which provided recommendations for the proposed initiative. In line with IMF guidance, the BoN is in the preparatory stage of rolling out a CBDC, focusing on its potential to improve the financial landscape in Namibia.
Kazembire Zemburuka, the BoN’s director of strategic communications and international relations, stated that the bank is examining how a CBDC might promote financial inclusion. The BoN’s approach regarding a digital currency is heavily influenced by the IMF’s recommended five-stage implementation plan: preparation, proof-of-concept, prototype, pilot, and production. Furthermore, the Bank is engaging with the central banks of Eswatini, Lesotho, and South Africa to assess the possibility of cross-border CBDC transactions.
Following its assessment, the IMF advised the Bank of Namibia to refrain from an immediate launch of a CBDC, emphasizing the need to strengthen the existing payment infrastructure instead. The IMF’s feasibility study indicated that a retail CBDC would not provide a distinct remedy for the country’s financial inclusion challenges. It urged the BoN to investigate how a CBDC could meaningfully influence monetary policy and financial stability before advancing to the next phases.
Zemburuka acknowledged the IMF’s guidance, confirming that the BoN intends to refine its strategy in response. The IMF’s technical assistance report highlighted the lack of robust support for a retail CBDC (rCBDC) and recommended postponing advanced technological exploration until clear benefits for payments are identifiable. They suggested that the Bank consider alternative regulatory measures to foster improved financial inclusion.
Namibia previously delved into the possibility of a digital currency with the review of a consultative paper in 2022. Notable consultations with central banks from neighboring countries regarding cross-border use cases have taken place; however, substantial advancements remain limited. In comparison to Namibia, Nigeria was the first African nation to introduce a CBDC, the eNaira, in 2021, though it has met with minimal success. Furthermore, Zimbabwe and Ghana have also undertaken discussions and initiatives related to digital currencies in recent times.
In summary, the Bank of Namibia is actively exploring the launch of a CBDC to enhance cross-border payments and financial inclusion. However, it is taking a cautious approach based on recommendations from the IMF, emphasizing improvements to the current payment infrastructure over a swift rollout of the digital currency. Collaborative discussions with regional central banks are ongoing, yet the focus remains on ensuring tangible benefits before proceeding with the CBDC implementation.
Original Source: www.mariblock.com
