Namibia is planning to join the growing list of countries that have introduced the Central Bank Digital Currency (CBDC), triggered by the rise of cryptocurrency.
In a thought leadership event held in the country’s capital Windhoek, the Bank of Namibia governor Johannes !Gawaxab, said the country is exploring ways to create a digital currency as part of the central bank’s strategic direction and rapid digitization of the financial system.
Techcabal reports that the event titled, “Central Banking Digital Currencies and Virtual Assets,” was graced by representatives from the Central Reserve Bank of El Salvador, the South Africa Reserve Bank, Bank of Ghana and the Central Bank of Nigeria.
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Nigeria is foremost amongst countries exploring digital currency to have launched CBDC called eNaira, while El Salvador had adopted bitcoin as a legal tender.
!Gawaxab said that a public consultation paper on CBDCs would be published soon to further demonstrate the Bank’s commitment to continued cooperation and dialogue with the industry, private sector innovators, the fintech community and other stakeholders in transforming the financial sector for the prosperity of all Namibians.
“If CBDCs are explored and implemented with due care and caution, they could hold immense potential benefit for a more stable, safer, more widely available, and less expensive means of payment than private forms of digital money,’’ said !Gawaxab.
But the governor warned that CBDCs are in their early stages thus there is a lot of uncertainty as central banks around the world are building up their understanding and technological capability to explore and optimally utilize new technologies to ready themselves for the future, especially the future of finance.
!Gawaxab’s announcement signifies a shift from Namibia’s previous stance on cryptocurrency. Just like many other countries that had before, opposed the use of cryptocurrency, the Southern African country is opening its door to a possible future of digital financial landscape that will have CBDC and cryptocurrency.
There is also another announcement along the digital line which has to do with Namibia’s position on Virtual Assets (VAs) and Virtual Assets Service Providers (VASPs). The central bank disclosed that while VAs in Namibia remain without legal tender status, their acceptance for the payment of goods and services is left to the discretion of any merchant and buyer.
The shift in Namibia’s stance on cryptocurrency means that the central bank needs to introduce a regulatory framework. While that is still in the pipeline, the apex bank has issued some warning.
The central bank warned that Initial Coin Offerings (ICOs) pose high risks and possibilities of fraud, manipulation, and misrepresentation, adding that it does not advocate nor support the general public’s engagement in ICOs.
But in response to the exponential growth in Vas, !Gawaxab said the central bank will amend applicable laws in consultation with stakeholders to accommodate it.
“To ensure a progressive regulatory response to the exponential growth in VAs, the Bank of Namibia has brought VAs and VASPs under its FinTech Innovations Regulatory Framework in a phased approach, through its Innovation Hub,” Gawaxab said. “The Bank of Namibia will engage VASPs and consider the amendment of applicable laws and regulations in consultation with other relevant authorities such as Namibia Financial Institutions Supervisory Authority (NAMFISA).”