Focus Area:
Retail and Payments
Overview:
The Central Bank of Eswatini (CBE) conducted a Central Bank Digital Currency (CBDC) diagnostic study in 2019–2020 which investigated the potential for a CBDC and the possible use cases for the implementation of a CBDC in Eswatini. Three use cases – payments, consumer, and economic policy were explored.
Motivations:
In its diagnostic study, the bank addressed the following questions:
1. What design principles should be considered for the development of a digital Lilangeni, including the governance, accessibility, and interoperability requisites?
2. What would be the potential use cases specific to Eswatini?
3. What distribution model will be most suitable for the Eswatini market?
4. How the technical design would look like?
5. What legal considerations needs to be addressed for issuing a retail CBDC in Eswatini?
Financial institutions involved:
Central Bank of Eswatini
Cenfri
Technology and Design partners:
Giesecke+Devrient (G+D)
Design considerations:
In the initial phase, no design is evaluated yet.
Technical Solution:
In the initial phase, no technical solution is finalized yet.
Conclusion:
The findings from Phase 1 of the CBDC diagnostic indicate that CBDC can bring benefits to the economy and financial system of Eswatini in three significant aspects: enhancing payment system efficiency, addressing consumer demand, and supporting fiscal consolidation. These positive outcomes highlight the relevance and advantages of considering the pilot-testing or eventual implementation of a CBDC in Eswatini. However, further research is necessary to determine if the required prerequisites for implementing the identified CBDC use cases are currently in existence.
Source:
https://www.centralbank.org.sz/wp-content/uploads/2021/04/CBE-Cenfri-CBDC-Diagnostic_Phase1-.pdf