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Expert demands research on digital currencies in Malawi

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Malawi University of Business and Applied Sciences (Mubas) Associate Professor of Economics Betchani Tchereni has demanded a research programme in digital currency in Malawi.

Tchereni was speaking on Friday when he made a presentation on ‘Central Bank Digital Currency: Is It Time for Digital Malawi Kwacha Yet?’ during the 2022 Monetary Policy Conference.

Central bank digital currencies are digital tokens, similar to cryptocurrency, issued by a central bank. They are pegged to the value of that country’s flat currency.

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Many countries are developing CBDCs, and some have even implemented them.

According to Tchereni, universities such as Mubas, University of Malawi, Catholic University and computer engineers, lawmakers, the Reserve Bank of Malawi and Bankers Association of Malawi (Bam) could come together and form a research group on the same.

“You eat an elephant slowly. We could get somewhere. At least with the understanding. We may not develop the computer code now but at least the understanding is important,” Tchereni said.

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Among other things, Tchereni said the Digital Malawi Kwacha could make it easy to easily gather, access and use data.

He said the Digital Malawi Kwacha would bring about increased transparency, accurate tracking, permanent ledgers and cost reduction on the part of the central bank.

Tchereni was, however, quick to note that a number of challenges could be encountered in the adoption of the central bank digital currency, including the fact that the technology is complex and has too many unknowns.

Head of Economics Department at the University of Malawi Jacob Mazalale agreed with Tchereni that there appears to be too many unknowns in the Central Bank Digital Currency (CBD) arena.

Mazalale cited examples of Senegal and Equador, which have cancelled their advances towards the currencies. He said Malawi could learn a thing or two from the two countries.

He underscored the need for more discussion around central bank digital currencies saying even if the central banks may not be interested at the moment, the discourse is emerging like a bush fire.

Mazalale emphasised the need for more advanced research before Malawi could go in the central bank digital currency path.

Currency Planning Manager for the Reserve Bank Muopeni Ngwalo said central bank digital currencies are shaping the way payments will be made in the future.

Ngwalo said according to the Bank for International Settlements there is vast research going on in the area, with about 86 percent of central banks researching and about 60 percent trying to experiment.

He said the earlier they understand the central bank digital currencies the better because sooner or later the digital currencies will catch up with Malawi.

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