The Central Bank of Egypt is actively exploring a change in its financial strategy. In November 2023, a government official revealed that the institution is considering the introduction of its central bank digital currency (CBDC) — the digital pound.
This initiative involves collaboration with the International Monetary Fund (IMF) and the World Bank.
- Abdel Monem Al-Sayed, Director of the Cairo Center for Economic and Strategic Studies, said the state is prioritizing digital transformation. The aim is to decrease reliance on cash and printed currency.
- He said the objective of the digital pound is also to improve transaction efficiency by simplifying processes and eliminating the need for intermediaries.
- While studies on the digital pound may take some time, officials are confident they are moving in the right direction with the digital transformation.
Why it matters
- The Egyptian economy has experienced turbulent times, witnessing its currency decline to approximately 50 pounds against the United States dollar.
- But the decline was deliberate. The North African nation devalued its currency to secure a $3 billion loan agreement with the IMF.
- The IMF deal failed after Egypt failed to implement its commitment to adopt a flexible exchange rate and pull back the military from its dominant economic position.
- The country’s debt level is also soaring. Debt repayments slated for 2024 have reached a record high, at a minimum of $42.26 billion.
- Egypt introduced high-interest dollar savings certificates to address economic pressures through Banque Misr and the National Bank of Egypt.
- Globally, over 100 nations, including 25 African countries, are actively exploring or embracing Central Bank Digital Currencies (CBDCs).