BoB considers introducing a ‘digital pula’
Mbongeni Mguni | Monday June 20, 2022 06:00
A Central Bank Digital Currency (CBDC) is a digital form of central bank money that is widely available to the general public. Instead of only printing money, a central bank like the BoB would issue electronic coins or accounts backed by the full faith and credit of the government.
The central bank’s spokesperson, Seamogano Mosanako said the assessment is looking at the impact of a digital currency on price and financial stability, monetary policy transmission, regulation and oversight of the financial and payments system as well as promotion of financial sector development.
“Ongoing work relates to needs analysis, resource requirements, coordination aspects and overall, prospects for its usefulness in the context of Botswana’s level of development, payments infrastructure and financial system,” she told BusinessWeek in an emailed response to questions.
In Africa, only Nigeria has launched a central bank digital currency, although South Africa has indicated that its plans are also at an advanced stage. United States research group, the Atlantic Council, estimates that at the latest count, 105 countries, representing over 95% of global GDP, were exploring CBDCs, compared to just 35 countries in May 2020. At least 50 countries are at an advanced phase of exploring CBDCs, the council said in a recent update.
Mosanako said the pace of the BoB’s assessment was aligned to research being done on central bank digital currencies by the Bank for International Settlements (BIS) and the International Monetary Fund (IMF).
In remarks at the 20th anniversary of the African Regional Technical Assistance Centre East in April, IMF deputy director, Bo Lin said if designed prudently, central bank digital currencies could reduce incentives for adopting crypto assets, and at the same time support public policy objectives such as efficiency and stability of the payment systems in the digital age.
The BIS, according to statements on its website, says central bank digital currencies could promote diversity in payment options, make cross-border payments faster and cheaper, increase financial inclusion, and possibly facilitate fiscal transfers in times of economic crisis.
The Bank of Botswana intends to stop the usage of cheques in the country from January 1, 2024, saying “more cost-efficient, safe, secure, and convenient digital/electronic payment instruments” are available in the country.