The Central Bank of West African States, which serves the eight west African countries that share the common West African CFA franc currency, has published the terms under which member countries’ national treasuries will link their solutions to a central platform run by the West African Economic and Monetary Union Interbank Grouping (GIM-UEMOA) in order to issue digital currency and prepaid cards for electronic payments of public allowances (salaries, scholarships, pensions, etc.).
“Digital currency is a monetary value reflecting a claim on the issuing institution that is held in electronic form, including magnetic; distributed without delay in exchange for remittance of funds in a sum equal to or greater than the monetary value issued; and recognized as a means of payment by natural or legal persons other than the issuing institution,” reads instruction №008–05–2015 governing the terms and conditions for carrying out the activities of electronic money issuers in the Member States of the West African Monetary Union (WAMU).
Here Is What You Need To Know
- The rules provide that the institutions that can issue electronic money are banks; payment financial institutions; decentralized financial systems and electronic money institutions.
- The rules therefore encourage public treasuries to promote the use of payment and withdrawal cards, electronic wallets, and telepayments, as well as any other modern payment method and instrument yet to be developed, in particular by forming groups with the goal of developing national or regional electronic transfer processes.
- However, payment through electronic or digital money has been limited, for now, to those who receive public state benefits, such as civil servants, grant recipients, or retirees.
- Any national public treasury can act by submitting an application to the Central Bank for authorization to issue electronic money, which will conduct a compliance review of the file.
Similar To Central Bank of Tunisia’s Digital Currency Project
The new rules are similar to those recently put in place by the central bank of Tunisia under Central Bank of Tunisia Digital Currency project.
The country’s Dinar Digital network under “Central Bank of Tunisia Digital Currency” project brings together member financial institutions, with the aim of using blockchain technology to fully digitalise the country’s fiat money (cash). The BCT Digital Currency project hopes to also improve efficiency and reduce the costs of financial transactions for Tunisians.
African digital currency African digital currency
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
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