Central Bank of Liberia Executive Governor, J. Aloysius Tarlue, Jr., has urged central banks in Africa to take measures to protect the public good against any potential disruptions in the financial sector and larger economy that may erupt out of the increasing trend of unregulated cryptocurrencies.
Cryptocurrency is purely a virtual currency that has no official physical asset and is usually driven by private-sector players.
Governor Tarlue noted the growing interest of central banks across the world in Central Bank Digital Currency (CBDC) and the need for sharing experiences in this new space for the benefit of the African continent.
Governor Tarlue said the emphasis about the greater use of financial technology, including digital finance, electronic money, digital and cryptocurrencies has been a subject of global policy discussions in the wake of the ongoing Coronavirus pandemic which has had devastating effects on the economies of states.
He was speaking at the 44th Ordinary Meeting of the Assembly of Governors of the Association of African Central Banks (AACB) in Banjul, Gambia, from August 4-5, 2022, when he chaired two of four plenary sessions (the 3rd and 4th Plenary Sessions) of a symposium organized by the Secretariat of the AACB.
The 3rd Plenary Session focused on the question: “Are Central Bank Digital Currencies an Effective Alternative to the Development of Unregulated Crypto-Currencies?”, while the 4th Plenary focused on: “Experience Sharing on Digital Innovations and the Future of the Financial Sector: Opportunities and Challenges for Central Bank Digital Currencies”.
Some of the key speakers at meeting were Mrs. MALANGU KABEDI MBUYI, Governor, Banque Centrale du Congo and outgoing Chairperson of the AACB; Hon. Lesetja Kganyago, Governor, South African Reserve Bank; Hon. Rwangombwa John, Governor, National Bank of Rwanda; Mr. Tarek Amer, Governor, Central Bank of Egypt; Mr. Luca Ricci, Division Chief of the African Department, International Monetary Fund; among others.
African countries are at different stages of developing central bank digital currencies or cryptocurrencies, with countries of more developed financial systems and markets, notably Nigeria, Ghana, South Africa, Kenya, and Egypt ahead of other countries.
The meeting that brought together over forty African central banks agreed that central banks in Africa should welcome the digital currency innovation as an opportunity to advance their financial inclusion agenda and prioritize an efficient national payments infrastructure to promote interoperability and real-time settlement as a necessary precondition for adopting digital currencies.
The Governors of the AACB welcomed the progress with the Pan African Payment and Settlement System (PAPSS) project, which is the foundation for promoting intra- and inter-regional trade on the continent and with other regions.
They also agreed that central banks need to be proactive in designing policies and regulatory frameworks to achieve the maximum economic benefits of digital currencies that will reduce the cost of printing hard currencies or paper banknotes.
Meanwhile, participants at the 44th Assembly of Governors of the AACB have underscored the crucial need for member central banks to remain focused and prioritize monetary policy responses to contain the rising inflation levels in member states as a result of the negative impact of COVID-19 and the ongoing Ukraine-Russia crisis.
They also called for policy support from the fiscal side as a means of minimizing the greater future cost of containing inflation. The governors noted that while the current external shocks were beyond the control of central banks, they (the central banks) still needed to be more aggressive in taming rising inflationary pressures, in keeping with their principal mandate of maintaining price stability.
The Governors recognized the crucial need for central banks to play a key role in supporting the agricultural sector to mitigate the impact of food shortage in member countries and contain inflationary pressure.
The 44th Ordinary Meeting was graced by His Excellency, Dr. Adama Barrow, President of the Republic of The Gambia, and an array of senior officials of The Gambia, Members of Parliament, Members of the Diplomatic Corp, and the Media. The President, in his address, commended the Governors for their unflinching commitment towards the realization of the monetary and economic integration of Africa.
The Association of African Central Banks is an autonomous and specialized agency of the African Union (AU) working to formulate and implement the African Monetary Cooperation Program (AMCP).
Governor Tarlue was accompanied to the 44th Ordinary Meeting by Mr. P. Alphonsus Zeon, Special Assistant; Mr. Mussah A. Kamara, Senior Technical Advisor; and Mr. Michael B. Ogun, Senior Advisor for Multilateral Relations.-Dispatch