According to the Bank of Namibia, we are currently witnessing an ongoing battle between regulated and unregulated currency on one side, and a second battle between sovereign and non-sovereign currency.
The bank hosted “a thought leadership event on digital currencies and virtual central bank assets” where it said it must defend regulated currency and rein in unregulated finance to ensure trust and stability in the financial system and manage the risks associated with digital forms of money. .
“Whether #CBDC are explored and implemented with care and caution, they could hold immense potential benefit for a more stable, secure, more widely available and less expensive means of payment than private forms of digital currency.”
—BitKE (@BitcoinKE) October 8, 2022
The bank also provided an updated position on virtual assets and virtual asset service providers (VASPs) stating that they remain non-legal tender and any use remains at the discretion of users. The bank has, however, been clear about initial coin offerings (ICOs), saying they are prone to fraud, manipulation and misrepresentation, therefore, it does not advocate or support the engagement of the big public in ICOs.
The event included representatives from other central banks and regulators from Africa and around the world where they discussed the different efforts and approaches of CBDCs and financial assets, as they champion the regulated currency. Representatives from the Central Bank of Nigeria, the Reserve Bank of South Africa and El Salvador made presentations at the event.
From the discussions, it was concluded that a CBDC would bring several benefits and that the Bank of Namibia should seek policy and legal changes to introduce it.
According to Johannes Gawaxab, Governor of the Bank of Namibia:
If CBDCs are explored and implemented with care and caution, they could hold immense potential upside for a more stable, secure, more widely available, and less expensive means of payment than private forms of digital currency. – Governor, Bank of Namibia
At the same time, the Bank of Namibia said it was ensuring a progressive regulatory response to virtual assets by allowing their involvement in its regulatory framework. He added that the acceptance of virtual assets for payment of goods and services remains at the discretion of any merchant and buyer willing to participate in such an exchange or trade.
While cryptocurrencies are not legal tender in the country, the bank has now integrated Virtual Assets (VA) and Virtual Asset Service Providers (VASPs) into its regulatory framework of Fintech innovations in a single approach. gradually, via its innovation hub. The central bank added that it was also considering amending “applicable laws and regulations diligently in consultation with other relevant authorities.”
The bank will publish a public consultation document on digital currencies in October 2022.