Senegal to use national digital currency based on Blockchain

Senegal to use national digital currency based on Blockchain

Recent reports indicate that the national digital currency dubbed the eCFA will expand to fourteen other countries across Africa. Senegal will be the

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Recent reports indicate that the national digital currency dubbed the eCFA will expand to fourteen other countries across Africa.

Senegal will be the second country in the entire world to implement the new national digital currency. Interesting thing is, the only other country in the world that has adopted the national digital currency is also African (Tunisia).

This currency is titled eCFA and is based on the blockchain. It is expected that this digital currency will serve as the official legal tender in conjunction with the CFA Franc (which is their current currency already adopted by up to 14 different countries in the same region mainly French colonies).
CFA Franc is a combination of two currencies already authorised for use by the French Treasury. It is equally worth noting that the eCFA is a result of a partnership between Banque Regionale de Marches as well as eCurrency Mint Limited.

BRM (a Senegal based bank which has specialised in capital markets and investment banking) is set to issue eCFA in agreement with e-money guidelines of the Banque Centrale des Etats de lAfrique de lOuest (BCEAO).

It is also expected that besides from serving as the main bank of West African economic and monetary union, The BCEAO is also set to assume responsibility of the distribution of digital tenders in several other countries in west Africa such as Mali, Guinea – Bissau, Benin, Niger, Cote dIvoire (Ivory Coast), Togo etc.
According to a press release published earlier in the month, the eCFA is a high-security digital instrument which can be held not only in all known mobile money but also e-wallets. It is set to secure worldwide liquidity, allow for interoperability and also provide transparency onto the whole digital ecosystem across WAEMU. Reports also indicate that: it was until late 2015 that Tunisia officially adopted Cryptocurrency centred on Blockchain technology for the transmission of its national currency. This initiative has been well received and is supported by Monetas amongst others.

The introduction of eCFA has since proven that Africa is open to accepting and implementing New FinTech solutions. Credit goes to M-Pesa in Kenya for being the first financial initiative to deploy this technology inspiring several others such as Bitpesa which presently make use of Bitcoin for their transactions across at least four African countries.

Criticism

The eCFA however, has since started receiving criticism because of its dependence on the already established central banking system.

Secondly, both Tunisia and Senegal’s digital currency have effected blockchain to serve as their technology though they are yet to use bitcoin as a currency.

There is undoubtedly an excitement in many countries across the world about digital currency holding the same value and characteristic of the same usability as fiat cash only that the details of implementing such a currency still remain scarce.

You will be glad to learn that eCFA will not only be secure cryptographically, it is also set to be compatible with many other digital money systems in the rest of the continent particularly in areas where majority of the people still do not have bank accounts.

Asian Banks Advocating For the adoption of Digital Currency

The move by Senegal to introduce digital currency comes at a time when several other countries are working towards developing digital cash of their own that is an equivalent of actual cash. Not long ago, the bank of China revealed its plans to soon issue its digital money that is based on the blockchain and cryptography.

At the same time, Singapore’s central bank is already working on a block chain proof of concept to encourage inter-bank payments within the country and internationally.

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