Ethiopia Initiates CBDC Development in Major Economic Reform

Share IT

Key takeaways:

  • As part of an economic reform plan, the National Bank of Ethiopia (NBE) has prepared two proclamations.
  • The proclamations have been accepted by the Council of Ministers and will shortly be presented to the House of Representatives.

As part of an economic reform plan, the National Bank of Ethiopia (NBE) has prepared two proclamations. Creating a legislative framework for introducing a central bank digital currency (CBDC) is one of them. 

The NBE Proclamation calls for a number of policy changes, including raising the NBE’s capital and establishing a foundation for consumer protection, as well as establishing a legal framework for a CBDC “as necessary.” 

The Banking Business Proclamation that goes along with it talks about opening up banking to international investment, taking action against “problem” banks, and setting up a regulatory sandbox to support creative financial solutions.

The proclamations have been accepted by the Council of Ministers and will shortly be presented to the House of Representatives. The government’s Homegrown Economic Reform Agenda includes the proclamations. 

In April, the privately held Ethiopian publication The Reporter reported on the government’s desire for a CBDC. It stated that the research would begin in June. The NBE also wants to be a part of “the Cross Border Payment System” by December, it continued. It gave no information regarding the system’s specifications.

Ethiopia has already started liberalizing its economy, removing the government’s monopoly on mobile money services and making large government payments using the blockchain-based digital infrastructure.

Despite obstacles like low internet penetration, the usage of crypto is increasing in several African nations. Not every attempt to introduce crypto has been effective. 

Notably, the Central African Republic started using Bitcoin as money and, with only modest success, introduced the Sango, a non-CBDC official cryptocurrency. As of this writing, the Sango currency website is not operational.

Although the licensing of “dozens” of data mining companies has attempted to take advantage of Ethiopia’s inexpensive electricity to mine crypto, digital currencies are still prohibited in the nation. Additionally, there were plans to implement the Web3 Fuse payment mechanism.

At least eighteen African nations are investigating CBDCs. With the eNaira, which debuted in 2022 as the second live CBDC globally, Nigeria has experienced mixed results. Zimbabwe introduced its newest currency on the basis of a government-issued token based on gold.

The government of Zimbabwe is now drafting legislation for the country’s crypto sector and is asking both local and global crypto service providers for their opinions. The government of Zimbabwe seeks to establish a regulatory framework that is appropriate for the country’s particular needs and conditions.

Share IT
Deep
Deep

Get Daily Updates

Crypto News, NFTs and Market Updates

Can’t find what you’re looking for? Type below and hit enter!