Central bank digital currency: what it can achieve and cannot achieve in Africa

Peterson Ozili

MPRA Paper from University Library of Munich, Germany

Abstract: This article presents a discussion on what a central bank digital currency (CBDC) can achieve in African countries and what a central bank digital currency may not achieve in African countries. The study shows that a central bank digital currency can achieve the following. CBDC can become a monetary policy tool; it can reduce the size of the informal economy; it can increase financial inclusion; it can increase digital financial literacy; it can reduce the circulation of counterfeit paper money; it can deepen existing payments system; it can improve social programmes and targeted welfare; it will increase transaction monitoring and surveillance; it can address tax evasion and increase tax revenue in African countries. The study also shows that a central bank digital currency may not completely replace cash in African countries; the issuance and use of CBDC won’t make African countries earn a ‘developed country’ status; CBDC adoption may not stop institutional corruption; CBDC adoption will not stop illicit activities in African countries; and CBDC adoption may not reduce the level of poverty in African countries.

Keywords: central bank digital currency; CBDC; Africa; poverty; financial inclusion; monetary policy; remittance; informal economy; welfare; corruption. (search for similar items in EconPapers)
JEL-codes: E52 E58 E59 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-afr, nep-ban, nep-fle, nep-iue, nep-mon and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:120966

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