Morocco's central bank governor calls for caution in dealing with CBDCs

Morocco’s central bank, Bank Al-Maghrib (BAM) has emphasized the need to deepen the dialogue on central bank digital currencies (CBDC) to address the numerous uncertainties surrounding them. 

What was said  

 Abdellatif Jouahri, the central bank governor said:

“The complexity and challenges related to CBDCs highlight the need to continue and deepen the debate.”

Of note

• This was made known during a high-level policy roundtable on CBDCs in Marrakech on Monday, with Kristalina Georgiva, the managing director of the International Monetary Fund (IMF) in attendance.

Key details

• Jouahri noted that the growing interest of institutions in CBDCs is a reflection of their ability to adapt to changes in the economic landscape. 
• He explained that central banks recognized the importance of maintaining their role as primary currency issuers after the emergence of Bitcoin. 
• According to the BAM governor, a key ambition for him is to explore and harness the opportunities presented by technological innovations, while understanding the risks involved. 
• He further noted that several conversations concerning the issuance of CBDCs have involved international bodies like the IMF and the Bank of Settlements (BIS). However, despite the progress, questions regarding the contributions of CBDCs and their impact of the key functions of central banks remain unanswered, he added.  
• During the roundtable, Georgieva elaborated on the potential benefits of CBDCs, highlighting their ability to enhance financial inclusion by providing affordable access to financial services and facilitating faster and more cost-effective cross-border payments. 

Key Quote

She said:

“However, if poorly designed, CBDCs could also lead to financial stability risks, data privacy and legal challenges, financial integrity and cyber risks, and central bank operational risks.”

Key background  

• In February 2021, Bank Al-Maghrib established a committee to thoroughly examine the advantages and disadvantages of CBDCs. However, no further updates regarding the committee's progress or findings have been made available since then. 
•  Nevertheless, the recent cautious stance adopted by BAM indicates that the bank's issuance of a digital dirham is unlikely to occur soon. 
• Despite exploring CBDCs, the use of crypto remains prohibited in Morocco.   
• South Africa and Ghana are currently piloting their own CBDCs while other African countries such as Tanzania, Rwanda, Kenya, and Uganda among others are still at the research phase.