November 24, 2022
  • November 24, 2022

Central Bank of Namibia Plans to Introduce CBDC

By on October 12, 2022 0

Bank of Namibia Governor Johannes!Gawaxab said the central bank‘s strategic focus and rapid digitalization of the financial system prompted it to think critically about a possible Namibian dollar CBDC in the landscape of digital payments of the future.

!Gawaxab was speaking at a thought leadership event in the capital Windhoek under the theme ”Central Banking Digital Currencies and Virtual Assets”, which was attended by representatives of the Central Reserve Bank of El Salvador, the South Africa Reserve Bank, Bank of Ghana and the Central Bank of Nigeria.

He further stated that a public consultation document on Central Bank Digital Currencies (CBDCs) would be released soon to further demonstrate the Bank’s commitment to continued cooperation and dialogue with industry and business innovators. private sector, fintech community and other stakeholders in financial sector transformation. for the prosperity of all Namibians.

“If CBDCs are explored and implemented with care and caution, they could hold immense potential upside for a more stable, secure, more widely available, and cheaper means of payment than private forms of digital currency,” said ! Gawaxab.

During the event, the central bank also announced its updated position on virtual assets (VAs) and virtual asset service providers (VASPs). In this regard, the Bank noted that VAs in Namibia are still not legal tender. Thus, the acceptance of AVs for payment of goods and services remains at the discretion of any merchant and buyer wishing to participate in such an exchange or trade.

This is a different and much more progressive position than the one the bank has taken in the past, where it stated that it “does not recognise, support or recommend the possession, use and trading in cryptocurrencies by members of the public” and that there would be no legal recourse for Namibians in the event that they lost money.

When it comes to initial coin offerings (ICOs), the bank said they have high risks and opportunities for fraud, manipulation, and misrepresentation. Accordingly, the Bank does not advocate or support the involvement of the general public in ICOs.

To ensure a phased regulatory response to the exponential growth of AVs, the Bank of Namibia has integrated AVs and VASPs into its regulatory framework for FinTech innovations in a phased approach, through its Innovation Hub. In this regard, the Bank of Namibia will engage VASPs and consider amending applicable laws and regulations in consultation with other relevant authorities such as the Namibia Financial Institutions Supervisory Authority (NAMFISA).

However, the Governor went on to warn that although CBDCs are in their infancy and there is a lot of uncertainty, central banks around the world are building their understanding and technological capacity to explore and make optimal use of CBDCs. new technologies to prepare for the future, especially the future of finance.

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