ZIMBABWEAN firm, Global Renaissance Investment (GRI) says Zimbabwe must seriously consider introducing a central bank digital currency (CBDC) to stabilise the economy.
A CBDC is sovereign legal tender—just like paper bills or coins— issued and backed by a central bank.
Although a CBDC is not a crypto currency, it is equivalent to cash represented in a digital, rather than physical form.
“Financial technology developments present opportunities that may be leveraged by regulatory authorities and the financial sector to enhance financial service offerings,”
GRI chief executive officer Ngoni Dzirutwe told NewsDay Business.
“If well implemented, a digital currency could be programmed to charge a very small sales tax on all transactions. In lieu of tariffs, a modest sales tax that actually gets collected digitally could finance government expenditures,”
said Dzirutwe, whose firm will in September hold an online digital indaba to discuss digital currencies and the future of traditional banking.
ICT minister Jenfan Muswere will be the guest of honour at the event, which will run under the theme
“Leveraging on Digitalisation for Robust Economic Growth — Normalising the Abnormal”.
Early this year, the Reserve Bank of Zimbabwe (RBZ) launched a financial technology regulatory sandbox as a platform for testing new financial innovations in a regulated environment before the technology is ushered into the market.
The regulatory sandbox concept was necessitated by the surge in the number of financial technology start-ups in Zimbabwe.
However, despite this encouraging approach, the central bank recently indicated that it was taking a guarded approach towards digital currencies.
“The bank is, however, cautious about the potential impact of digital currencies, given the sensitivities around currency issues in the national context. As such, the bank will remain guided by international developments on Fintech issues,”
RBZ governor John Mangudya said.
In May, the South African Reserve Bank embarked on a study to investigate the feasibility of a CBDC, seeking ways on how the digital currency can be used by consumers in Africa’s second largest economy.