The interaction between the Central Bank as a state issuer and private sector providers is crucial for the acceptance and distribution of a Central Bank Digital Currency (CBDC).
One example of this is the initiative in the southern African country of Eswatini.
In a pioneering move, the Central Bank of Eswatini (CBE) has opened its CBDC-platform, which is based on Giesecke+Devrient’s (G+D) Filia solution, to fintechs so they can test existing or new services.
Instacash, a service provider for mobile electronic money transfer services, used this opportunity to carry out payment transactions with the digital Lilangeni via a feature phone for the first time.
The African continent is a pioneer in the development and practical testing of Central Bank Digital Currencies.
This includes countries such as Ghana and the Kingdom of Eswatini. Visitors to the Eswatini International Trade Fair, for example, were able to test payments with the digital Lilangeni, before the project was rolled-out to a larger part of the population as part of a pilot.
During the pilot, the Central Bank of Eswatini invited fintechs to evaluate new digital payment services and gave them access to G+D’s Filia ecosystem.
On its own initiative, the local financial services provider Instacash used this opportunity to develop a proof-of-concept (PoC) for an application enabling integration of the digital Lilangeni into existing Instacash services. The standard tools and documentation of the Filia ecosystem were used – no special developments or additional support from G+D were required.
This underlines the role of Filia as a comprehensive, open innovation platform for the development of future-oriented CBDC solutions.
With the Instacash application, for example, it is now possible to use the digital Lilangeni to open a wallet, check the balance, access financial services or make transfers.
This requires neither an expensive smartphone nor an online connection. Instead, access is possible via the familiar mobile phone codes (GSM or USSD codes), which are simply entered using a keypad.
This cost-effective technology, which has been established for decades, is very popular in Africa, as around half of the population does not have a smartphone.
The solution developed as part of the PoC is therefore also an important contribution to greater financial inclusion for the population.
“Instacash’s initiative underlines the enormous potential that the introduction of Central Bank Digital Currencies opens up for payment players,” says Dr. Raoul Herborg, Managing Director of the CBDC unit at G+D. “It is an excellent example of a customer-centric collaboration between Central Banks and private digital currency providers that also strengthens financial inclusion by integrating CBDCs into existing financial services.”
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