• Wed. Jun 22nd, 2022

Central African Regional Banking Regulator Reminds Member States of Digital Currency Ban

ByHazel R. Lang

May 19, 2022

The Central African Banking Commission (COBAC), Central Africa’s regional banking regulator, has apparently opposed the adoption of Bitcoin as legal tender by one of its member states, the Central African Republic (CAR) .

COBAC oversees the banking sector of the Economic and Monetary Community of Central Africa (CEMAC). According to a Reuters report, the body has issued a notice to member countries, reminding them that there is a permanent ban on digital currencies in the region.

The body reiterated that the ban was put in place to ensure financial stability in the region. As part of the ban, banks operating in the region are prohibited from holding, exchanging or converting digital currencies. They are also prohibited from settling transactions in digital currencies and from using digital currencies to value assets or liabilities.

“In order to guarantee financial stability and preserve customer deposits, COBAC has recalled certain prohibitions related to the use of crypto-assets in CEMAC,” the notice states.

The Central African Republic responds, highlighting its sovereignty

The notice follows a special board meeting held on May 6 to consider the impact of digital currency adoption. The Central African Republic (CAR), a CEMAC member country, which adopted Bitcoin as legal tender in April, responded to the notice.

Speaking to Reuters, government spokesman Serge Ghislain Djorie said that despite being aware of the notice, COBAC had not yet officially forwarded it to CAR. However, he stressed that the sovereignty of the CAR to make its own decisions must be recognized.

“We are waiting for the official transmission of the document before we can respond. You have to understand that each state has sovereignty,” Djorie said.

Meanwhile, COBAC has not been the only watchdog to worry about the risks posed by digital currencies in the region. The International Monetary Fund (IMF) issued a warning to CAR shortly after the country’s president announced his intention to make Bitcoin legal tender.

The IMF said the country lacked the financial and communications infrastructure for such a move. And that he shouldn’t see digital currencies as a magic bullet for all a country’s problems. The IMF has indicated that it is ready to help the country make its decision.

Notably, COBAC’s notice to its member countries also comes at a time when the digital currency market has plunged in market capitalization.

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