According to Ruth Baitshepi, head of the digitalisation and innovation hub at the apex bank, the Bank of Botswana is currently in the initial stages of a feasibility study to determine whether the country should launch a central bank digital currency (CBDC).
Speaking at a media briefing last week, Baitshepi said research projects are ongoing as part of this initial process.
"First and foremost, we want to determine if there is even a need for a CBDC in Botswana and whether the emergence of digital assets poses any threat to the sovereignty of the Pula to necessitate a CBDC," Baitshepi said.
A CBDC is a form of money that is denominated in fiat currency (central bank money), in an electronic form, and is a liability on the central bank’s balance sheet similar to cash and central bank deposits.
Advantages of a CBDC include speeding up cross-border transactions, boosting financial inclusion, and countering criminal activity by allowing for the creation of digital records and traces. However, some disadvantages include a lack of protection for personal data.
The South African Reserve Bank currently has an ongoing pilot project for a CBDC, while other countries in the region, such as Namibia, Zambia and Zimbabwe, are in the research phase. Only Nigeria has launched a CBDC on the continent.
According to Baitshepi, the process is still quite far from a point where the bank would be able to determine whether a CBDC is introduced or not.