Some economic experts from Africa suggested that the African continent now needs a universal cryptocurrency and an integrated capital market to promote trade and sustain growth.
The importance of universal cryptocurrency
African economic experts believe that after the Covid-19 crisis, a universal cryptocurrency and a comprehensive capital market are needed to promote trade and maintain the growth of the African continent.
According to a Press statement Published by the African Development Bank Group (ADBG), these experts presented their arguments when discussing reforms to the African financial system.
Anouar Hassoune, one of the experts cited in the statement, a professor of finance and the CEO of West Africa’s rating agency, believes that universal cryptocurrency has the potential to reduce the cost of doing business. He explained:
We need to come up with a cryptocurrency that every member country can accept. It’s best to do it at the mainland level, we have the expertise to do it. This is a governance issue, not a technical issue.
Hassoune also suggested that this cryptocurrency could be used as an alternative to monetizing some of the endowments of the African continent, such as gold and other commodities.
The statement also quoted Emmanuelle Riedel Drouin, head of the Economic and Financial Transformation Department of the French Development Agency. Although experts support the idea, she warned that some conditions need to be met before this common cryptocurrency can be launched. She explained:
“We should not forget that there is still a lot of work to be done in terms of digital infrastructure, payment system development, payment system interoperability, etc., so there is a lot of work to be done. Financial institutions are about the digitization of delivery and payment channels.”
Africa needs a well-functioning comprehensive capital market
Drouin also added that although the central bank plays a vital role, the economy must still diversify its funding sources to reduce dependence on them.
Although many African countries oppose privately issued cryptocurrencies, some countries have shown interest in developing their own digital currencies. In fact, one of the countries, Nigeria, has already launched its digital currency, and Ghana is also expected to launch the same digital currency. Some experts worry that it is the creation of this different digital currency that will reduce the likelihood of Africa having its own common cryptocurrency goal.
At the same time, the statement also quoted the words of Augustine Ujungwa, an economist at the West African Monetary Institute, who was in favor of a well-functioning comprehensive capital market. He explained:
At present, our market is very small, our country is also very small, we need to take a regional approach to integrate the market. But before we get there, we must coordinate the laws, regulations and agreements that govern our fintech and digital systems.
Regarding the role of the central bank, the economist suggested that they should now begin to consider innovative ways of financing key sectors of the economy.
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