The Bank of Mauritius is targeting a year-end rollout for the island nation’s central bank digital currency (CBDC) pilot, the central bank’s governor said Wednesday.
Speaking at CoinDesk’s Consensus 2021, Governor Harvesh Seegolam said the Republic of Mauritius is in the midst of finalizing its position papers on a CBDC and would publish “concrete examples” of its initiatives in the near future.
While discussions and initiatives surrounding CBDCs have been around for a while, China’s supercharged approach towards rolling out a national digital currency could end up accelerating the process worldwide, panelists said during the chat. The panel also included Greg Medcraft, director of the OECD’s directorate for financial and enterprise affairs and Loretta Joseph, a fintech adviser with the financial services commission of Mauritius.
“CBDCs will be here to complement, and to address gaps that the traditional monetary system is not able to fulfil,” Seegolam said.
Central banks worldwide have indicated that they might be examining the possibility of digitizing their fiat currencies, but concerns around compliance, security and privacy have also been on the minds of central bankers and digital currency proponents alike as they weigh the upsides and possible pitfalls of central banks entering a direct financial relationship with their citizens.
“I believe that in most countries, it will be optional whether a person chooses to actually use a CBDC,” Medcraft said. He added that it is possible stablecoins and state-issued CBDCs will co-exist in the future, giving the privacy conscious an alternative way to go digital with their fiat.
Seegolam added that the island nation has been consulting with the International Monetary Fund (IMF) on possible designs for its CBDC and that the global monetary body has been helping Mauritius with its tentative digital currency plans.
Noting that financial inclusion is also a priority when central banks consider issuing digital fiat, Seegolam added that that the trilemma between compliance, security and privacy occupies center-stage in the minds of central bankers when considering a CBDC rollout.
Medcraft said that core principles central banks would need to consider when thinking about their CBDC design would be “cross-border functionality, making sure that it supports the need of the economy and financial inclusion.”
Seegolam said that while CBDCs come with their advantages, they aren’t likely to replace cash but rather complement the existing monetary system.
CBDCs get serious
On a similar panel at the 2020 Consensus conference, Lord Meghnaud Desai, chairman of the Official Monetary and Financial Institutions Forum (OMFIF), noted that when issuing a CBDC, nations should consider whether poorer populations prefer using cash and how a digital currency could affect international remittances.
At the time, Seegolam said his central bank was moving closer to a CBDC pilot, though few details were available.
“We as central bankers, as governors, are speaking regularly on a bilateral basis to also see, what are the other use of collaboration policy that you know we need to work towards designing a lean system that would be able to speak with each other,” Seegolam said on Wednesday, adding that a shared standard for CBDCs worldwide will also be important as nations move forward in this journey.
“May CBDCs be with you soon,” said Medcraft, as the panel closed out, noting that the internet has taught us that the “walled garden” approach doesn’t necessarily work when it comes to technology.