Bank of Namibia governor Johannes !Gawaxab has stated that the central bank’s strategic direction and the rapid digitisation of the financial system have prompted it to think critically about a potential Namibia Dollar CBDC in the digital payment landscape of the future.
!Gawaxab was speaking at a thought leadership event in the capital WIndhoek under the theme ‘’Central Banking Digital Currencies and Virtual Assets’’, which was attended by representatives from the Central Reserve Bank of El Salvador, the South Africa Reserve Bank, Bank of Ghana and the Central Bank of Nigeria.
He further stated that a public consultation paper on central bank digital currencies (CBDCs) would be published soon to further demonstrate the Bank’s commitment to continued cooperation and dialogue with the industry and private sector innovators and the fintech community and other stakeholders in transforming the financial sector for the prosperity of all Namibians.
“If CBDCs are explored and implemented with due care and caution, they could hold immense potential benefit for a more stable, safer, more widely available, and less expensive means of payment than private forms of digital money,’’ said !Gawaxab.
During the event, the central bank also announced its updated position on Virtual Assets (VAs) and Virtual Assets Service Providers (VASPs). In this regard, the Bank noted that VAs in Namibia remain without legal tender status. As such, the acceptance of VAs for the payment of goods and services remains at the discretion of any merchant and buyer willing to participate in such an exchange or trade.
This is a different and much more progressive stance compared to the one the bank took in the past where it stated that it did “not recognise, support and recommend the possession, utilisation and trading of cryptocurrencies by members of the public” and that there would be no legal recourse for Namibians in the event they lost money.
With regards to Initial Coin Offerings (ICOs), the bank stated that they pose high risks and possibilities of fraud, manipulation, and misrepresentation. As a result, the Bank does not advocate nor support the general public’s engagement in ICOs.
To ensure a progressive regulatory response to the exponential growth in VAs, the Bank of Namibia has brought VAs and VASPs under its FinTech Innovations Regulatory Framework in a phased approach, through its Innovation Hub. In that regard, the Bank of Namibia will engage VASPs and consider the amendment of applicable laws and regulations in consultation with other relevant authorities such as Namibia Financial Institutions Supervisory Authority (NAMFISA).
However, the governor went on to caution that although CBDCs are in their early stages and there is a lot of uncertainty central banks around the world are building up their understanding and technological capability to explore and optimally utilise new technologies to ready themselves for the future, especially the future of finance.