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Reserve Bank of Malawi ponders on digital currency

Joseph Mwanamvekha

The Reserve Bank of Malawi (RBM) has said is still considering suggestions by some entities to start issuing digital currency in the country.

RBM Governor Dalitso Kabambe said this Monday when the Monetary Policy Conference held under a theme ‘Crypto currency and Monetary Policy in Malawi.’

A crypto currency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

Crypto currencies or digital currencies which include Bitcoin, Litecoin, Ethereum, Zcash, Dach and Ripple, remains an illegal tender for trading in the country.

The central bank is the only mandated institution to issue bank notes.

Kabambe said Malawians should desist from transacting in digital currencies until there is a policy shift on the matter.

“There are already some challenges that some technology companies want to be issuing digital currency without involving the central bank which is bad. There are other countries that are afraid to adopt the digital currencies but we don’t want to fear it,” Kabambe said.

Crypto currencies have emerged as a huge industry worth billions of dollars in less than 10 years.

Recently, Facebook announced plans to launch its own crypto currency, GlobalCoin in early 2020, allowing nearly 2.4 billion monthly users to make digital payments in a dozen countries.

Minister of Finance and Economic Planning, Joseph Mwanamvekha urged the central bank to find means of ensuring that ordinary Malawians are not affected in an event that the crypto currency has been introduced on the local market.

On the fiscal side, Mwanamveka said government is undertaking major efforts to support inflation stabilisation agenda.

“Most importantly, we are expecting that we will be able to get some financial policies and innovations that can facilitate growth of our economy. This, we believe can help in creating jobs for millions of our people,” Mwanamvekha said.

Meanwhile, commenting on the economy, Kabambe said RBM expects the economy to grow by at least seven percent in 2020.

He, however, observed that the weather-related shocks remain a threat to economic growth strides.

“Malawi has registered a number of successes including the doubling of number of bank accounts from 1.3 million at the beginning of 2018 to about 2.6 by December 2018. Overall transactions processed in all digital financial platforms increased by 104 percent in volume from 1.5.4 million in 2016 to 215.9 million in 2018 with a corresponding monetary value of K1.3 Trillion in 2016 to K3.4 Trillion in 2018,” Kabambe said.

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