The Banque des États de l’Afrique (BEAC) wants a single digital currency that can be used by all member states affiliated with this central bank.
Modernize payment system
Bloomberg writes that the board sent an email to the Bank after a meeting in Douala, Cameroon. The head of the board, Herve Ndoba, signed the email. The board encouraged the Central Bank to create a digital currency to promote financial inclusion and modernize payment systems in the region.
It also urged the regional bank to develop a framework to regulate cryptocurrency.
Odd duck
BEAC serves as a central bank for the following countries:
- Cameroon
- Democratic Republic of the Congo
- Gabon
- Chad
- Equatorial Guinea
- Central African Republic
The most notable name on this list is the Central African Republic. This country is, in fact, one of only two countries in the world to have adopted bitcoin as legal tender. When this country announced their intention to go full bitcoin, they received a lot of backlash from BEAC. The central bank strongly opposed the decision to use bitcoin as legal tender.
The central bank threw even more oil on the fire by issuing a statement on the issue on Thursday.
They state that bitcoin as legal tender in the Central African Republic is “incompatible with the agreements and conventions governing the Central African Monetary Union and the Statutes of the Bank of Central African States.”
This makes it seem like the Central African Republic is left with no choice, but despite criticism from the BEAC and from other international bodies, they are going ahead with bitcoin.
The Central African Republic, like the other countries in this organization, is not yet developed enough for everyone to have electricity, let alone the Internet. So the adoption of bitcoin is happening sparsely, and if the central bank wants to make a success of their own crypto, they need to make sure they have adequate access to the Internet.
What is a Central Bank Digital Currency?
So the BEAC wants to develop its own digital currency for the participating countries. Such a central bank cryptocurrency is called a CBDC called.
It is, with a little imagination, a cryptocurrency, but is really nothing more than a monetary tool of a central bank to force restrictions on payments and to curb financial privacy.
There is no firm definition yet of what exactly a CBDC is, that’s because none has been successfully launched on a large scale yet. In addition, central banks worldwide seem to have different ideas.
But if you had to generalize, you could say that like paper banknotes, a CBDC is a means of payment, a unit of account, and a store of value. And like paper money, each unit is uniquely identifiable to prevent counterfeiting.
CBDC is part of the total bulk of money, along with other forms of money such as cash and book money. It can be stored, transferred and transmitted by all kinds of digital payment systems and services.
It is not a requirement that a CBDC run on a blockchain. Many central banks do talk about it, and blockchain provides the technological architecture to keep track of the transactions of all businesses and citizens. Commercial banks are also not eager for this, as their operations are largely taken over by central banks.
If you would like to read more about BEAC, the role of colonialism and why bitcoin would be just right for this region, we recommend this article by Alex Gladstein to.
What about the rest of Africa?
African countries such as Ghana, Nigeria, South Africa and others are already working on their own Central Bank Digital Currency. The Central Bank of Nigeria introduced the eNaira project in October 2021. Although there are no official reports on its use, the acceptance of the eNaira seems to be low.
