The south-central African country of Zambia is joining the ranks of others across the continent and much of the world in exploring the pros and cons of having a central bank digital currency (CBDC), cryptocurrencies and other digital assets.
The Bank of Zambia, the country’s central bank, sees the merits of a CBDC to promote financial inclusion and is planning to have research finished soon with the possible implementation of a CBDC by the end of the fourth quarter, Bloomberg reported on Wednesday (Feb. 9).
See also: More Central Banks Announce CBDC Plans to Defend Monetary Home Turf vs Cryptos
“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,” Nkatya Kabwe, acting assistant director of communications at the Bank of Zambia, told Bloomberg.
One of the big perks of Zambia having a digital currency is less expensive transaction costs in the country, as it is among the countries with the deepest pockets of poverty and inequality, according to the World Bank.
Aside from financial inclusion and transportation, other benefits include improved traceability and the overall safety and effectiveness of the country’s payment systems. The move to a CBDC would also encourage the people of Zambia to take part in a formal financial system.
Read more: Nigeria’s Central Bank Preps for Launch of eNaira Digital Currency
Earlier in February, the central bank made it clear that cryptocurrencies are not legal tender in the country. The central bank emphasized that anyone taking a gamble on crypto and related digital assets should fully understand the financial risks at play.
Israel, Ghana, the Bahamas, Nigeria, China and the U.S. are also weighing CBDCs or have already introduced them.
Per Bloomberg, central banks neglecting to introduce their own CBDCs could risk their citizens turning to other countries’ digital money and in turn, some countries could lose their grasp on their own monetary systems, according to Bank of America analysts.
