Namibia Advances CBDC Project Despite IMF’s Caution

Namibia is advancing its retail central bank digital currency (CBDC) project despite the IMF’s skepticism. The Bank of Namibia aims to enhance financial inclusion and cross-border payments through the CBDC. While the IMF has recommended caution, the project continues to pursue public interest and stakeholder collaboration.

Namibia is proceeding with its retail central bank digital currency (CBDC) project despite skepticism from the International Monetary Fund (IMF), which has advised exploring alternative digital finance avenues. Kazembire Zemburuka, the Bank of Namibia’s director of international relations, announced that the project is currently in its “preparation phase,” focusing on enhancing financial inclusion and improving cross-border payments.

The Bank of Namibia is assessing public interest in retail and wholesale CBDCs, while also identifying potential challenges and desired features of a digital currency. Zemburuka’s comments were reported by local media, indicating ongoing engagement with potential stakeholders, including the IMF.

In a study conducted in January, the IMF urged caution, stating that there was insufficient support for the issuance of a retail CBDC and recommending against advancing technological exploration until clear advantages of the CBDC for payments emerged. The IMF additionally encouraged policies that would facilitate financial inclusion in Namibia.

Zemburuka acknowledged the limitations of a digital dollar in overcoming issues such as inadequate infrastructure and low financial literacy. Nevertheless, he emphasized its potential to enhance financial services. He noted, “despite challenges, like integrating CBDC with NamPay and IPS, BoN views CBDC as a valuable digital payment option.”

The Bank of Namibia is collaborating with neighboring central banks, including the South African Reserve Bank and the Bank of Lesotho, with a focus on cross-border CBDC payments. This initiative aligns with other African nations exploring digital currencies aimed at promoting financial inclusion, as demonstrated by Ghana’s upcoming launch of its digital cedi and Nigeria’s previous launch of the eNaira.

In summary, Namibia is steadfast in its pursuit of a retail central bank digital currency, demonstrating a commitment to enhancing financial inclusion and facilitating cross-border transactions. Despite the IMF’s cautionary stance, which highlights the need for tangible benefits before proceeding, the Bank of Namibia continues to engage with a variety of stakeholders to navigate the complexities involved and leverage CBDC for improved financial services.

Original Source: coingeek.com