Zambia has become the latest country to reveal its interest in a central bank digital currency (CBDC), seeking to join Nigeria and Ghana as pioneers of digital money in the African continent. An official at the country’s central bank recently revealed that the bank has been conducting feasibility studies on CBDCs and would be completing them soon.
Zambia has consistently ranked in the top 10 African countries in regards to ease of doing business, with Forbes ranking it seventh in the continent. According to a new report, the Southern African country seeks to improve this and boost its economy by launching a CBDC.
Zambia joins nations such as Israel, China and the U.S. that are toying with the idea or have issued a digital version of their currencies https://t.co/vsUaw8VjjY
— Bloomberg Crypto (@crypto) February 9, 2022
Speaking to Bloomberg, the acting assistant director of communications at the Bank of Zambia, Nkatya Kabwe, revealed that the bank has been researching whether a CBDC can cut costs and raise inclusion in the formal financial system. The central bank also believes that a CBDC could increase traceability, safety, and efficiency of the country’s payment systems.
Kabwe expects the bank to complete this study by the fourth quarter of the year.
“The results of the research will form part of the input in the policy considerations on whether to introduce a central bank digital currency in Zambia,” he revealed in a statement to Bloomberg.
The report comes just weeks since the central bank issued a warning against digital currencies, reminding the public that it doesn’t recognize them as legal tender. At the time, the central bank warned that “…people who want to deal in them should have a clear understanding of all the risks that come with such payment and investment instruments.”
If it decides to pursue a CBDC, Zambia could become the second country in Africa to launch its CBDC after Nigeria. The West African country launched its digital naira in the fourth quarter 2021, and despite a few glitches at launch, it has been a success.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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