According to the Bank of Namibia, we are currently witnessing an ongoing battle between regulated and unregulated money on one side, and a second battle between sovereign and non-sovereign money.
The bank hosted ‘a thought leadership event on Central Bank Digital Currencies and Virtual Assets’ where it said it has to defend the regulated money and rein in unregulated finance to ensure trust and stability in the financial system and manage risks associated with digital forms of money.
“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.”
— BitKE (@BitcoinKE) October 8, 2022
The bank also provided an updated position on virtual asseets and virtual assets service providers (VASPs) saying they remain without legal tender status and any use remains at the discretion of users. The bank however was clear on Initial Coin Offerings (ICOs) saying they are prone to fraud, manipulation, and misrepresentation, thus, it does not advocate nor support the general public’s engagement in ICOs.
The event included representatives from other Central Banks and regulators from Africa and internationally where they discussed the different efforts and approaches to CBDCs and financial assets, as they defend regulated money. Reps from the Central Bank of Nigeria, South Africa Reserve Bank, and El Salvador made presentations at the event.
From the discussions, it was concluded that a CBDC would bring several benefits and the Bank of Namibia would need to seek policy and legal changes to introduce it.
According to Johannes Gawaxab, Governor, Bank of Namibia:
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. – 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. It added that the acceptance of virtual assets 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.
While cryptocurrencies have no legal tender status in the country, the bank has now brought ;virtual assets (VA) and virtual assets service providers (VASP) under its Fintech Innovations Regulatory Framework in a phased approach, through its innovation hub.’ The central bank added it is also considering amending ‘applicable laws and regulations diligently in consultation with other relevant authorities.’
The bank will publish a public consultation paper on digital currencies in October 2022.