The small African country of Eswatini, formerly known as Swaziland, is taking steps towards launching a Central Bank Digital Currency (CBDC) to improve access to digital money and make cross-border trade easier.
The Central Bank of Eswatini, a country with a population of 1.2 million located between South Africa and Mozambique, has released a detailed plan for its potential CBDC, called the digital lilangeni. Unlike traditional cryptocurrencies that operate on a distributed ledger, this digital currency would use a different type of distributed database.
A Digital Currency Built for Eswatini’s Needs
The proposed digital lilangeni would allow users to access it through online wallets, managed by financial institutions, or hard wallets like smart cards, which could work even without internet access. This flexibility could benefit people in areas with limited connectivity.
The Central Bank would distribute the digital lilangeni through financial institutions, and it would offer some privacy protections while still complying with regulations, such as anti–money laundering rules. The system would also allow for programmable payments, enabling automatic transactions or parental controls over children’s spending.
Challenges and Progress of Eswatini’s CBDC
Despite efforts by the central bank to move toward a “cash-lite” society, cash remains the most popular payment method in Eswatini. However, digital financial services such as mobile money and bank cards are becoming more widespread, and the country even phased out the use of checks in 2022.
One of the key challenges for the digital lilangeni will be ensuring that it works smoothly within the existing electronic payment systems and follows international standards, especially since Eswatini’s currency is tied to the South African rand.
The design of the CBDC was developed in partnership with Giesecke+Devrient, a company that specializes in digital currency solutions. The digital lilangeni has already gone through trials, including a test environment and a live pilot. Although there were some delays due to staff training, further improvements are expected if the currency is fully launched.
Summary Review: Eswatini’s move towards introducing a digital currency reflects the country’s ambition to enhance its financial system and make payments more accessible, both locally and for cross-border transactions. By developing the digital lilangeni, Eswatini is setting itself up for a more advanced financial future, while addressing specific local needs, such as the lack of internet access in some areas. As the digital currency continues to undergo trials, it could become an important tool for promoting financial inclusion and modernization in the region.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
