Financial inclusion and poverty reduction: Prioritizing CBDC implementation is aimed at providing financial services to the unbanked and underserved populations. As a part of this, considering the large informal sector in some countries of the region, CBDCs could also potentially provide financial services to workers in the informal economy, helping them access banking services and participate in the formal economy. Increasing efficiencies for payments: Domestically and internationally the cost of payments is high in the LAC region.21 Thus, CBDC could promote advancements in payment systems that could lower these costs. When it comes to cross-border payments including remittances, CBDCs have the potential to facilitate lowcost and efficient cross-border remittances to support the large number of migrants sending money back to their home countries. Addressing financial stability and crises (inflation and currency volatility concerns): Developing CBDCs could serve as a potential tool to address financial stability concerns, including offering emergency liquidity assistance during times of financial crises or natural disasters. CBDC could be explored in how it may address the region’s history of inflation and currency volatility to provide a stable and reliable digital currency option that can be used as a store of value and medium of exchange. 2.3 Sub-Saharan Africa Several countries in Sub-Saharan Africa have made notable progress in CBDC research. Various jurisdictions in the region have initiated studies and pilot projects to assess the feasibility and implications of CBDC adoption. For instance, the South African Reserve Bank has launched a project called Khokha to explore the feasibility, desirability and appropriateness of using a CBDC in the country’s financial system.22 The project aims to assess various aspects, including scalability, resilience and regulatory compliance. In October 2021, the Central Bank of Nigeria was the first in Africa to issue a CBDC: the eNaira. The CBDC was intended to meet its population’s strong demand for digital payments and to reduce remittance transfer costs.23 Initially, only individuals with a bank verification number were able to open a wallet (approximately 26% of the population).24 Although the central bank was targeting 8 million users by August 2022, fewer than 1 million Nigerians (equivalent to less than 0.5% of the population) were using the digital currency.25 At the end of 2022, Nigeria suffered a cash shortage that led to a surge in demand for alternative payments, including the eNaira. The value of eNaira transactions surged 63% to 22 billion naira year to date in 2023.26 In 2022, the Central Bank of Nigeria reported that 13 million more wallets have been opened, 12 times that of October 2021. Governor Emefiele stated that increased adoption may have been driven by the payment of social welfare through the CBDC programme.27 Below are features and considerations for CBDC in Sub-Saharan Africa that reflect the specific socioeconomic and technological context of the region. CBDCs have the potential to facilitate low-cost and efficient crossborder remittances to support the large number of migrants sending money back to their home countries. Central Bank Digital Currency Global Interoperability Principles 11
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