Browsing: CBDC

In May 2023, Zimbabwe released a gold-backed digital currency for peer-to-peer and business transactions. It acted as a store of value as the Zimbabwean dollar continued its steep depreciation. International gold prices controlled by the London Bullion Market Association will dictate the local pricing of Zimbabwe’s digital currency tokens.

Cryptocurrencies and the technology that enables them, blockchain, are here and they are here to stay. They are not a…

It is not easy to create a common currency since it needs the creation of a central monetary system for…

CBDC is a digital currency issued by the central bank and intended to serve as legal tender while Crypto is a privately issued digital asset based on a network that is distributed across a large number of computers.

The fundamental difference between CBDC and Crypto is the former is asset-backed while the latter is not, so seeks to create value through some intrinsic mechanism like mining. One primary drawback is that the speculative nature of mining makes it considerably volatile.

This has given rise to “stable coins” which are crypto assets that aim to maintain a stable value relative to a specified asset, or a pool of assets. A Global Stable Coin (GSC) is a stable coin with potential reach and adoption across multiple jurisdictions and could achieve substantial volume down the line.

Whether Nigeria and Ghana will abandon their digital currencies and jump on the Eco train is an unclear narrative, but it appears unlikely because of the significant investments put into them and the optimism by the governments to embrace digital transformations.

Nigeria had banned cryptocurrency transactions in February last year which increased the popularity of the eNaira as an alternative for cross-border trade and remittance inflows.

eNaira critics say that the solutions being offered by the digital currency are already existing in online banking and bank card transactions.