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Sunday, July 14, 2024

COMESA commends Zimbabwe for introducing digital currency

Story by Tichaona Kurewa

THE Common Market for East and Southern Africa (COMESA) has commended Zimbabwe for introducing Central Bank Digital Currencies (CBDCs) to eradicate the use of non-African currencies in intra-Africa trade.

This comes after Zimbabwe launched the transactional capabilities of Zimbabwean Gold (ZiG), as a medium of exchange, denominated in milligrammes of gold.

Delegates attending the 27th Meeting of the COMESA Committee of Governors of Central Banks in Victoria Falls have been impressed by the fact that Zimbabwe has put the best foot forward in introducing CBDCs.

“The digital currency is going to leapfrog Africa into a single mode of payment which will help transactions, which will help business to be undertaken using a digital form of money. I commend the Central Bank of Zimbabwe because this is the way. You can see it is a form of digital currency that has been tokenised. It is backed by gold to keep trust in the people and time will come when they have built that confidence and they may not need that gold and that will be the currency,” said COMESA Assistant Secretary General, Honourable Dev Haman.

University of Cambridge’s Judge Business School Director, Professor Robert Wardrop said, “This is a very important development for Zimbabwe, especially that the central bank started with gold backed tokens. People here in Zimbabwe understand the value of gold and this will certainly build their confidence. Building confidence is very important for central banks within the populations. Overall, this is a very positive initiative underway in Zimbabwe.”

Zimbabwe took the opportunity to acknowledge the effectiveness of CBDCs.

“ZiG primarily serves as an alternative investment instrument, motivated by the success of the Mosi-oa-Tanya gold coin. To date, both have proved to be effective monetary policy instruments in stabilising the Zimbabwe dollar through mopping up excess liquidity from the market and as a store of value.

“The tokenisation of assets including gold represents a logical step towards digital central bank money. Through research, study tours and close collaboration with peer central banks, the Bank has continuously reviewed and refined the CBDC project since its inception in 2021,” highlighted COMESA Committee of Governors of Central Banks chairperson, Dr John Mangudya.

The symposium will among other areas cover the critical aspects of financial technology innovations and climate change.

It is envisaged that ZiG will form the basis and pathway to the country’s development of CBDCs.

The 2022 Bank of International Settlements (BIS) survey showed that 93 percent of central banks are exploring CBDCs, with 58 percent likely to issue retail CBDCs in the short or medium term.

More than 100 countries are exploring retail CBDC issuance, and some central banks are already conducting trial runs.

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