Home Crypto News Ethiopia to Launch CBDC Legal Framework

Ethiopia to Launch CBDC Legal Framework

17 Jun, 2024 Crypto News

Ethiopia to Launch CBDC Legal Framework

The National Bank of Ethiopia (NBE) has drafted two proclamations as part of an economic reform initiative.

One proclamation includes creating a legal framework for a central bank digital currency (CBDC).

The NBE Proclamation outlines policy changes that involve establishing a legal framework for a CBDC “as necessary,” increasing the NBE’s capital, and creating a legal basis for consumer protection.

The accompanying Banking Business Proclamation addresses the liberalization of foreign investment in banking, corrective measures for “problem” banks, and the creation of a regulatory sandbox for innovative financial solutions.

These proclamations have been approved by the Council of Ministers and will soon be presented to the House of Representatives.

These measures are part of the government’s Homegrown Economic Reform Agenda

In April, the privately owned Ethiopian newspaper The Reporter highlighted the government’s interest in a CBDC, stating that a study would commence in June.

The NBE also aims to join “the Cross Border Payment System” by December, although no specifics about the system were provided.

Ethiopia has already moved towards economic liberalization, including ending the state monopoly on mobile money services.

The country employs blockchain-based digital infrastructure for large government payments.

Crypto adoption is progressing in several African countries despite challenges like low internet penetration.

Not all efforts to introduce crypto have been successful.

The Central African Republic adopted Bitcoin as a currency and launched a non-CBDC government cryptocurrency called the Sango, which has seen limited success.

The Sango currency website is currently non-functional.

Digital currencies remain illegal in Ethiopia, though the country has licensed “dozens” of data mining firms to take advantage of its cheap electricity for crypto mining.

There are also plans to introduce the Web3 Fuse payment system.

At least 18 African countries are exploring CBDCs. Nigeria has experienced mixed results with the eNaira, launched in 2022 as the world’s second live CBDC.

Zimbabwe introduced a government-issued gold-based token as the foundation for its latest currency.

Sources:

https://cointelegraph.com/news/ethiopia-cbdc-economic-reform

https://www.thereporterethiopia.com/39549/

https://eastleighvoice.co.ke/africa/51161/ethiopias-council-of-ministers-approves-key-banking-reforms

https://cbdctracker.org/

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