Leading the way with a groundbreaking approach that signals a significant shift in economic strategy, reports from the Egyptian press suggest that the nation is making strides in the development of a Central Bank Digital Currency (CBDC). The revelation is part of a broader economic vision outlined in a government document spanning from 2024 to 2030, a document yet to be unveiled to the public. The confirmation of this digital endeavor was obtained through CBDC.Guide, which accessed the information via a public EGYPT website summarizing the contents, and it outlines the ambitious plan to introduce the e-Pound by the end of the decade.
Sayed Khedr, a respected economic expert in Egypt, has emerged as a vocal advocate for the prospective e-pound, citing its purported advantages over privately issued digital currencies such as Bitcoin. Khedr’s primary contention lies in the perceived risks associated with the anonymity and uncertain origins of cryptocurrencies like Bitcoin, raising concerns about their security. He argues that a digital currency backed by the reputable Central Bank of Egypt (CBE) would inherently offer a level of security unmatched by private counterparts.
Addressing concerns about the potential impact on physical banknotes, Khedr has reassured skeptics that the introduction of the e-pound will not lead to a decline in the circulation of traditional currency. In fact, he goes a step further by suggesting that with effective marketing, the e-pound could become a catalyst for indirect economic growth in Egypt.
This move towards a CBDC aligns with the Central Bank of Egypt’s earlier pronouncement in the 2022 financial stability report, where it revealed its ongoing efforts in implementing both a CBDC and an electronic know your customer (e-KYC) system. The primary motivation, as stated at the time, was to preempt the widespread adoption of cryptocurrencies. However, with the planned launch in 2030, questions arise about whether this might be too late to counter the increasing influence of cryptocurrencies.
Notably, Egypt’s engagement with several international organizations in its CBDC research, coupled with its receipt of aid from the International Monetary Fund (IMF), indicates a broader global collaboration. The IMF, renowned for assisting numerous developing economies in their CBDC research, is likely one of these international organizations providing support to Egypt’s endeavor.
In the broader context of global developments, the inclusion of Egypt in the BRICS trade organization has become a focal point of interest. BRICS, comprising Brazil, Russia, India, China, and South Africa, is reportedly expanding its membership to include six new nations, with Egypt being one of them. The BRICS nations have been at the forefront of discussions regarding a shared digital currency, a notion that gained traction during a meeting last August. However, recent developments indicate a shift towards using local currencies for cross-border payments, moving away from reliance on the dollar.
Four out of the five founding BRICS members are actively advancing in the development of their CBDCs, positioning them prominently in Chainalysis’s top 20 for cryptocurrency adoption. China, a pivotal member of the BRICS alliance, is actively involved in the mBridge cross-border CBDC project, streamlining efficient cross-border payments without relying on the dollar as an intermediate currency. A recent update from mBridge revealed that the Central Bank of Egypt is among the 23 observer central banks involved in the initiative.
Among the BRICS constituents, India has undertaken advanced pilots for both retail and wholesale digital rupee, concurrently working on a cross-border CBDC project with the UAE. Russia, another founding member, has initiated CBDC trials with a specific focus on cross-border transactions. Brazil, on the other hand, is progressing with its DREX wholesale CBDC project.
The convergence of Egypt’s CBDC aspirations with the developments within BRICS highlights a broader global trend towards embracing digital currencies. As geopolitical dynamics continue to evolve, it remains to be seen how these initiatives will reshape the economic landscape, not only for Egypt but for the entire global community. The journey towards a digital future has begun, and Egypt is positioning itself at the forefront of this transformative wave.
Reference:
https://www.egypttoday.com/Article/3/129670/CBE-seeking-to-launch-government-issued-E-Pound-to-boost
