The Reserve Bank of Malawi (RBM) says it remains cautious on the ongoing demand for the adoption of cryptocurrencies (digital currencies) as legal tender because it could affect monetary policy decisions.
RBM Governor Dalitso Kabambe said this yesterday in Mangochi at the opening of a one-day 2019 Edition of the Monetary Policy Conference under the theme Cryptocurrencies and Monetary Policy in Malawi.
He said the conference sought to deliberate such emerging financial matters and provide insights into how the country can move forward with similar debates taking place globally.
Kabambe described cryptocurrencies as a digital form of currency that can perform in a similar way as coins and bank notes that the central bank releases in the economy.
He said technology firms want to legally push for cryptocurrencies usage to run side by side with central bank currencies.
Kabambe described emergence of cryptocurrencies as the uncharted territory
that will change the conduct of price and financial stability objectives as well as the twin mandates of central banks.
He said: “We are in the early stages of this technology. If you look at the financial system now, it has undergone several significant changes.
“We used to have bank cheques, but we now have plastic money, Internet banking, point of sale devices, mobile money transfers. Over and above, we now have the emergence of digital currencies.”
Kabambe admitted that cryptocurrencies pose a problem to financial stability, but said currently central banks have developed regulatory instruments and frameworks to regulate the financial sector to guarantee fstability.
On his part, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said cryptocurrencies, if left unchecked, could threaten the economy as some dealers are engaged in fraud.
He said: “As government, we need to probe through this discussion whether unregulated currencies have the potential for uncontrolled money creation; hence, causing inflation.”
In his presentation, associate economics professor at University of Malawi’s Chancellor College, Patrick Kambewa, said cryptocurrencies pose challenges to the economy as it may contribute to reduced cross-border trade and undermine performance of conventional financial markets.
He said it was important for the central bank to prioritise the protection of investors and consumers and safeguard the overall financial stability.
Some western countries such as Japan, Switzerland, Germany and Singapore recognise cryptocurrencies as legal tender.