The nation intends to establish a regulatory sandbox and legislative framework “as necessary” for the implementation of CBDC.
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As part of an economic reform plan, the National Bank of Ethiopia (NBE) has prepared two proclamations. Creating a legislative framework for the introduction of a central bank digital currency (CBDC) is one of them.
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The NBE Proclamation calls for a number of policy changes, including raising the NBE’s capital and establishing a foundation for consumer protection in addition to establishing a legal framework for a CBDC “as necessary.” The Banking Business Proclamation that goes along with it talks about opening up banking to international investment, taking action against “problem” banks, and setting up a regulatory sandbox to support creative financial solutions.
The proclamations have been accepted by the Council of Ministers and will shortly be presented to the House of Representatives.
The central bank is planning extensive changes
The government’s Homegrown Economic Reform Agenda includes the proclamations. The government’s interest in a CBDC was reported in April by the privately owned Ethiopian publication The Reporter. It stated that a research would begin in June. The NBE also wants to be a part of “the Cross Border Payment System” by December, it continued. It gave no information regarding the system’s specifications.
Ethiopia has already started the process of liberalizing its economy, removing the government’s monopoly on mobile money services, among other things. Large government payments are already made in the nation using blockchain-based digital infrastructure.
Africa’s cryptocurrency experience is mixed.
Despite obstacles like low internet penetration, the usage of cryptocurrencies is increasing in a number of African nations. Not every attempt to introduce cryptocurrency has been effective. Notably, the Central African Republic started using Bitcoin as money and, with only modest success, introduced the Sango, a non-CBDC official cryptocurrency. As of this writing, the Sango currency website is not operational.
Although the licensing of “dozens” of data mining companies has attempted to take advantage of Ethiopia’s inexpensive electricity to mine cryptocurrency, digital currencies are still prohibited in the nation. Additionally, there were plans to implement the Web3 Fuse payment mechanism.
At least eighteen African nations are investigating CBDCs. With the eNaira, which debuted in 2022 as the second live CBDC globally, Nigeria has experienced mixed results.
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