Tanzania has apparently begun investigating the possibility of establishing a central bank digital currency (CBDC). Nigeria, which established its digital currency last month, is the country’s inspiration. Other African countries have also declared ambitions to establish CBDCs.
Tanzania Tries CBDC
According to a Bloomberg article on Friday, Governor Florens Luoga of the Bank of Tanzania disclosed the country’s CBDC intentions on Thursday at the 20th Conference of Financial Institutions (COFI).
“To guarantee that our nation does not fall behind in the adoption of central bank digital currencies,” he stated, “the Bank of Tanzania has already begun preparations to develop its own CBDC.”
As a result, the governor stated that the central bank is aiming to extend its study into digital currencies and increase its team’s ability.
Luoga stated that this decision was motivated by the inauguration of Nigeria’s own CBDC, the eNaira, last month. Nigeria collaborated with a German FinTech firm to establish a digital currency to supplement the actual naira. The West African country is the second to have an official CBDC, following the Bahamas, which established one last year.
In addition, the governor stated that the central bank intends to diversify its foreign exchange holdings. It will purchase gold from local refineries to achieve this goal. “The monetary gold that we intend to purchase should have a purity of at least 99.5 percent,” he stated. In addition, he anticipates the country’s inflation rate to remain within the planned range of 3% to 5% in 2021-22.
Luoga went on to say that the central bank is still wary about cryptocurrency. In addition, he reminded the public of its unlawful position in the nation, advising them to be cautious before investing.
According to the central bank, cryptocurrencies have been prohibited in Tanzania since 2019 because they are not legally recognized. This may change soon since the Bank of Tanzania is allegedly preparing to lift the prohibition. This development results from Tanzanian President Samia Suluhu Hassan’s request to the central bank to prepare for cryptocurrencies immediately after taking office.
African Countries’ Digital Currency Development
More and more governments are investigating the use of central bank digital currencies in their own countries. CBDC usage is progressively increasing throughout Africa.
Nigeria was the first African nation to establish a CBDC. Other African countries are also investigating the possible benefits that CBCDs might give to their economies.
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), stated around two months ago that over 110 nations are investigating CBDCs.
The Bank of Ghana has announced that the CBDC will be launched soon. Other nations, such as South Africa, Zimbabwe, and Namibia, are still investigating the technology’s viability.