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Africa’s central banks eager to explore digital currencies

Three African countries participated for the first time in a Bank for International Settlements (BIS) survey that shows about a fifth of the world’s central banks are likely to issue their own digital currencies in the next three years.

Central banks from Madagascar, Mozambique and Tanzania joined the BIS annual central bank digital currencies (CBDCs) survey to increase Africa’s tally in the total 65 apex banks that took part in the 2020 version released this week.

They join the likes of Cape Verde, Egypt, Eswatini, Morocco and South Africa, which have been involved in the assessment in the past.

“During the course of 2020, work on CBDCs continued apace amid the Covid-19 pandemic. The vast majority of central banks in the survey – 86% – are now exploring the benefits and drawbacks of CBDCs,” states the BIS, which serves as a bank for central banks.

Its latest report shows that most central banks are exploring CBDCs (about 60% of central banks up from 42% in 2019) and moving into more advanced stages of CBDC engagement (14%), progressing from conceptual research to practical experimentation, as interest in CBDCs continues to be shaped by local circumstances.

It also points out that central banks from emerging markets and developing economies have relatively stronger motivations to issue a CBDC as financial inclusion and payments efficiency objectives drive top the general purpose for their CBDC work.

Meanwhile, even as the tally rises, no African country has officially confirmed it has concluded plans to issue a CBDC.

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