Zambia Begins CBDC Research Citing Cryptocurrency Associated Risks

After the likes of Japan, India, and Jamaica, the latest country to join the list of countries that made headlines for their CBDCs is Zambia.

Zambia’s central bank yesterday announced its stance on cryptocurrency as well their plans for a central bank digital currency.

A Digital Kwacha in the Making?

In a report by Bloomberg, Zambia is said to be expecting the completion of its central bank digital currency formation research by the end of this year. Nkatya Kabwe, acting assistant director of communications at the regulator stated:

“The results of the research will form part of the input in the policy considerations on whether to introduce a central bank digital currency in Zambia”

One of the major reasons behind this move is so to create a financial system that would reduce their transactions costs as well as boost participation from its citizens.

The other significant reason is the rise of cryptocurrencies in the country. The central bank is wary of the volatility that ensues in the crypto market and for the same reason, it warned people by asking them to have a “clear understanding of the risks involved with such payment and investment instruments” before being a part of it.

Another reason for the development of CBDCs in Zambia is so that the Bank of Zambia can improve transaction traceability, safety, and efficiency of payment systems as well as expand the financial system to a larger population.

State of Crypto?

The country currently does not consider cryptocurrencies of any kind a legal tender in the country.

Although back in 2018 the Zambia Securities and Exchange Commission did warn cryptocurrency exchanges operating in the country to make sure that they comply with the Securities Act established in the country.

At the moment over 40 other countries are in the stage of researching their very own digital currencies including the United States, New Zealand, and Indonesia.

While countries like Russia are advancing towards the development of their CBDCs, only a small part of the world is keeping up with them.