Egypt's Central Bank Is Looking Into Digital Currency Issuance

While the cryptocurrency market is slowly picking itself back up, numerous governments national central banks throughout the world are working on their own central bank digital currencies (CBDCs).

Now, recent reports indicate that the Egyptian Central Bank is also considering whether the launch of their own digital currency would be a smart financial move. According to the bank’s vice-governor, Ayman Hussein, the central bank is currently carrying out a viability study in partnership with several international financial institutions. At this time, no details are available regarding the identity of these partners.

So far, the bank hasn’t yet decided whether the CBDC will be used as a bank-to-bank currency, or whether customers will get access to it as well. It is likely that this will be determined following the end of the viability study. It is important to keep in mind that its main purpose is to encourage Egypt’s ascension as a cashless society, by maximizing the occurrence of online payments. Despite this aspect, cash is still majorly used throughout the country, whereas a significant percentage of the population remains unbanked. Reports indicate that up to 84% of the population does not own a bank account, which makes the journey to a cashless society seem quite complicated.

In terms of the main benefits associated with the blockchain-based currency, the central bank believes that the CBDC will help reduce transaction and monetary issuance cost, thus saving the country money in the long run.

Egypt’s sudden interest in CBDCs is interesting, since Egypt has often positioned itself against cryptocurrencies. Based on this, back in 2017, the country’s central bank stated that since there are no laws regulating bitcoin, the population should refrain from using the crypto asset. Additionally, in early 2018, one of Egypt’s main clerics made a controversial press statement, saying that trading bitcoin is forbidden from a religious standpoint, whereas an official advisor said bitcoin is actively being used to fund terrorist organizations.

Based on everything that has been outlined so far, if opted for, Egypt’s CBDC will be directly tied to its fiat currency, and most likely lead to reduced transaction costs between banks.