Kingdom

Bank

The Central Bank of the Kingdom of Eswatini, the landlocked country of 1.2 million people sandwiched between South Africa and Mozambique, has released a design paper describing its potential central bank digital currency (CBDC), the digital lilangeni.&nbsp;
The digital lilangeni would be a tokenized retail CBDC run on a distributed database, rather than a distributed ledger. Blogger and CBDC consultant John Kiff recently&nbsp;<a data-ct-non-breakable="null" href="https://kiffmeister.com/2024/10/10/kiffmeisters-fintech-daily-digest-20241010/" rel="null" target="null" text="null" title="null">took</a>&nbsp;note of the design paper.
<h2 id="a-cbdc-tailored-to-eswatini-s-specific-needs">A CBDC tailored to Eswatini’s specific needs</h2>
The CBDC would have hosted online wallets&nbsp;managed by financial institutions and hard wallets, most likely in the form of a smart card, that could function in the absence of internet access, according to the design&nbsp;<a data-ct-non-breakable="null" href="https://www.centralbank.org.sz/wp-content/uploads/2021/04/2024-Fintech-Digital-Lilangeni-Design-Paper.pdf" rel="null" target="null" text="null" title="null">paper</a>.
The digital lilangeni would be intermediated, with financial institutions distributing the currency to users using infrastructure operated by the central bank. The CBDC would feature pseudo-anonymity that would preserve privacy without compromising Know Your Customer and Anti-Money Laundering requirements.&nbsp;&nbsp;
Digital lilangeni payments would be programmable at the wallet level to enable automated payments or place restrictions on children’s spending, for example.
<figure>
 <img alt="African nation of Eswatini releases design for tokenized retail CBDC" src="https://s3.cointelegraph.com/uploads/2024-10/01927858-9875-7546-adfc-ebe6006bed4c" title="">
 <figcaption style="text-align: center;">
 Two-tiered governance of the digital lilangeni. Source: <a data-ct-non-breakable="null" href="https://www.centralbank.org.sz/wp-content/uploads/2021/04/2024-Fintech-Digital-Lilangeni-Design-Paper.pdf" rel="nofollow noopener" target="_blank" text="null" title="https://www.centralbank.org.sz/wp-content/uploads/2021/04/2024-Fintech-Digital-Lilangeni-Design-Paper.pdf">Central Bank of Eswatini</a>
 </figcaption>
</figure>
<h3 id="eswatini-s-cbdc-in-context">Eswatini’s CBDC in context</h3>
Cash remains the dominant form of payment in Eswatini despite the central bank’s efforts to advance a “cash-lite” society and the growth of digital financial services like mobile money and bank cards. The central bank decided to phase out checks in 2022.&nbsp;
Interoperability will be a key issue for the digital lilangeni, which has to work within the existing electronic money framework and international standards. The lilangeni is pegged to the South&nbsp;African rand.
<figure>
 <img alt="African nation of Eswatini releases design for tokenized retail CBDC" src="https://s3.cointelegraph.com/uploads/2024-10/0192785a-0ce7-7a7d-8b70-5ac02a481de5" title="">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/imfcapdev/status/1823732408921022641" rel="nofollow noopener" target="_blank" text="null" title="https://x.com/imfcapdev/status/1823732408921022641">IMF Capacity Development</a>
 </figcaption>
</figure>
The CBDC was designed in conjunction with Giesecke+Devrient using its Filia CBDC technology and has already been subjected to proof-of-concept and one sandboxed and one live pilot project. Staff training was a source of delay in the projects and would have to be addressed on a larger scale if the CBDC were to be implemented.
Related:&nbsp;<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/hong-kong-launches-ehkd-plus-tokenization" rel="null" target="null" text="null" title="null">Hong Kong’s e-HKD project expands into tokenization, programmability</a>
The Eswatini CBDC proposal&nbsp;<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/rwanda-bnr-retail-cbdc-feasibility-study" rel="null" target="null" text="null" title="null">resembles Rwanda’s envisioned digital</a>&nbsp;currency in several ways. Like Rwanda’s digital franc, the Eswatini CBDC would be token-based and operate on a distributed database, which the Rwandans expected to be more reliable than a blockchain.&nbsp;
In addition, the Rwandan and Eswatini CBDCs feature programmability, which while looked at with disfavor in the Global North, could provide advantages in less developed economies. In Kazakhstan, for example, programmable CBDC&nbsp;<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/kazakhstan-digital-tenge-rail-project-china-pilot" rel="null" target="null" text="null" title="null">is seen as a tool to battle</a>&nbsp;corruption.&nbsp;
Magazine:&nbsp;<a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/digital-yuan-adoption-payments-regulation/" rel="null" target="null" text="null" title="null">How the digital yuan could change the world… for better or worse</a>
&nbsp;

African nation of Eswatini releases design for tokenized retail CBDC

Table of Contents

Cointelegraph

Other articles published on Oct 10, 2024

Bitcoin Whale Goes Bearish With $424 Million in BTC

CARV Launches $CARV Token: Empowering Data Ownership And Value Generation in Gaming and AI

South Korea Allows Division of Cryptocurrency in Divorce Cases — Legal Experts

AI Companions Price Prediction: AIC Slumps 15%, But This PEPE 2.0 Meme Coin Is Roaring Towards $2...

It’s good that Bitcoin doesn’t have an eccentric founder — Adam Back

Moon Musk (MOONMUSK) Will Explode Over 17,000% Before Exchange Listings, While Shiba Inu and Doge...

Join our free newsletter for daily crypto updates!