The benefits of digital currencies for developing nations have been touted for a while now. Even the Facebook Libra agency claims that it wants to use the Libra coin to provide banking services to underserved communities globally. It appears that Tunisia has been paying attention and they are taking concrete steps to ensure the benefits of digital currencies reach their citizens. On November 7, TASS News Agency reported that Tunisia’s central bank was working on a CBDC project.
Already in Beta Testing
The report said that the central bank has launched a test form of the nation’s digital currency at the Forex Club of Tunisia. At the event, there was a ceremonial transfer of one digital Dinar from the head of the Tunisian central bank to an official from the International Monetary Fund.
This technically makes Tunisia the first nation in the world to issue a CBDC. During the event, the central bank also announced that some of its holdings had already been converted into the digital Dinar. This digital currency is far different from the Venezuelan Petro, which is considered a cryptocurrency and not a CBDC by experts.
The IMF and CBDCs
The IMF has been supportive of the idea of digital currencies. In September, Tommaso Mancini-Griffoli, the Division Chief of the IMF’s Monetary and Capital Markets Department said that such digital currencies could be issued via private-public partnerships.
The IMF sees CBDCs as a great way to regulate the issuance and use of digital currencies globally. Another major benefit is that it cuts costs for end-users while enabling financial inclusion, especially in developing nations. This is possible because liability is held at the central bank rather than by commercial banks. With such robust protection, it could help to reduce the cost of maintaining the payment system, as is the case with existing mobile payments in African such as MPesa.
Issuance of the Digital Dinar
Tunisia’s CBDC, dubbed the E-Dinar, will be issued via 2000 kiosks throughout Tunisia as well as online. The E-Dinar will be used to make payments at shops, cafes, restaurants, and various other establishments. To complete a transaction, users will only need to scan a QR code. The nation also plans to use the E-Dinar to make international payments, thereby bypassing the use of the USD. Users will be issued with a digital wallet, which they can top up via a browser app. There are plans to issue a mobile app in the future.
Tunisia is partnering with Universa, a Russian-based industrial blockchain development platform. They have been working on the E-Dinar for about a year now. To ensure the sovereignty of Tunisia s not compromised, Universa is going to hand over all encryption keys to the Central Bank of Tunisia, which means the developers will not be able to view the transactions or block the platform at any time.
According to Universa, various other nations could soon issue a CBDC. One of the most obvious is China. Others that could soon follow suit are Canada, Singapore, Thailand, the Philippines, Brazil, Argentic, and Malaysia.
Image Source: Flickr / Bhanadri Frever