By Lamin Cham & Tabora Bojang
President Barrow has applauded the significant progress and improvements made by the Association of African Central Banks towards the adoption of a single currency and a common Central Bank.
Speaking at the 44th meeting of ACCB in Banjul yesterday, Barrow said the objectives of the Association to promote cooperation on monetary, banking, and financial matters in Africa conform to the principles of the African Continental Free Trade Area established to integrate African economies.
The president called on the African governors to diligently examine digital innovations and weigh on its potentials towards scaling up Africa’s economic development through financial inclusion, economies of scale, and lower transaction costs.
“Such innovations are critical factors for fiscal policy development, as they create opportunities for Central Banks to consider the use of digital currencies. I understand, however, that these come with regulatory challenges,” the president said.
President Barrow also implored them to deliberate on current global challenges that adversely affect African economies and proffer proactive fiscal measures in this regard to stem the adverse effects of these shocks and build resilient African economies.
“With resilient economies, we will be better positioned to implement policies that ensure job creation, women empowerment, and youth employment in Africa. To sum it up, we must implement policies that raise living standards on the continent and transform our nations into higher-income countries,” Barrow added.
Gambia’s Central Bank governor, Buah Saidy who is expected to assume the leadership of the Association taking over from the governor of Congo’s Central Bank, said since the 2006 food crises that affected some countries in the continent, Africa continue to witness major external shocks, including the financial and economic crisis of 2008, the commodities crises of 2014, the COVID-19 pandemic and now the Russia-Ukraine war. He said while the crises cited above have devastating consequences on our economies, they provide lessons and opportunities to consolidate African solidarity, adhere to multilateralism and shift global markets towards Africa.
“We have everything in our arsenals to build economies that are robust and resilient, improve food self-sufficiency and disaster preparedness and reduce dependence on other parts of the world for survival,” Saidy stated.
The IMF country representative, Mamadou Barry urged of central banks in Africa to stand the storms of new and unprecedented digital innovations in the financial sector as well as carry out their monetary mandates. He said there is a need for them to carefully evaluate the benefits and weigh them against the challenges and risks, considering the local context and internal capacities.
“For CBDCs to be successful they also need to be accompanied by sound macroeconomic, supervisory, and regulatory policies that reinforce confidence in the local currency. In addition, how CBDCs could affect the private industry for digital payment services should be carefully thought through and managed, as some private operators can have systemic importance and hence pose systemic risks,” he said.
The six-day meeting had discussions on the realisation of a single currency and common central bank in Africa, digital innovations in the financial sector, their likely impacts and implications on financial stability and fiscal policies and how they can be mitigated.