The Bank of Namibia is exploring the launch of a central bank digital currency (CBDC) to enhance cross-border payments and financial inclusion. Following IMF advice, the BoN is prioritizing the upgrade of existing payment systems rather than an immediate CBDC launch. They are also collaborating with central banks in neighboring nations to evaluate cross-border CBDC feasibility.
The Bank of Namibia (BoN) is contemplating the issuance of a central bank digital currency (CBDC) aimed at enhancing cross-border payments and promoting financial inclusion. Following a technical assistance mission from the International Monetary Fund (IMF), the BoN has entered a preparatory stage to assess the feasibility of a CBDC rollout. As part of their exploration, discussions are ongoing with central banks in Eswatini, Lesotho, and South Africa regarding potential CBDC collaboration for cross-border transactions.
Kazembire Zemburuka, the director of strategic communications and international relations at BoN, noted the significance of understanding how a CBDC could bolster financial inclusion. The IMF has advised Namibia to take a cautious approach in launching a CBDC, suggesting that improvement of the current payment infrastructure be prioritized instead. The IMF’s February feasibility study report highlighted that a retail CBDC may not effectively address financial inclusion challenges in Namibia within the immediate future.
The IMF has recommended that Namibia focus on evaluating the implications of a CBDC on its monetary policy and financial stability prior to any potential implementation. Zemburuka has confirmed that BoN welcomes this counsel as it endeavours to refine its strategy for a CBDC launch. In its analysis, the IMF stated, “As the mission did not find a strong support for rCBDC issuance to address gaps in payments, it recommends against pursuing advanced technological exploration beyond proof-of-concept until tangible benefits of CBDC for payments are evident.”
Historically, Namibia first broached the subject of a digital currency in 2022 through a consultative paper on CBDCs; however, progress has been limited since then. Other African nations have made various strides in the CBDC landscape, with Nigeria leading the way in 2021 with the eNaira, which encountered challenges. Meanwhile, Ghana plans to introduce its CBDC, the eCedi, by year-end after conducting successful pilot programs.
In conclusion, the Bank of Namibia is assessing the potential implementation of a CBDC to improve cross-border payments and enhance financial inclusion. The IMF’s recommendations suggest a cautious approach, advising that immediate infrastructure improvements be prioritized over rapid CBDC rollout. As Namibia moves forward, it remains essential to consider the existing financial landscape and the implications for monetary stability.
Original Source: www.mariblock.com
