Real-world applications
Episode 8: Central Bank Digital Currencies (CBDCs) – What They Mean for Zimbabwe
As digital assets such as Bitcoin and stable coins gain wider use, central banks are creating their own form of digital money known as Central Bank Digital Currencies (CBDCs). The central bank issues and manages a CBDC, which serves as a digital representation of the national currency. It combines the efficiency of innovative technology with the stability of government-backed money. With several countries already experimenting with CBDCs, understanding this innovation is critical for Zimbabwe’s financial future.
Key differences with other cryptocurrencies
While both CBDCs and cryptocurrencies use digital technology, their foundations are different. CBDC sare centralised and controlled by the state, while cryptocurrencies are decentralised and maintained by global computer networks.
A CBDC enables government oversight of money flows, whereas cryptocurrencies are designed to operate independently of central authority. A CBDC also differs from mobile money services like EcoCash or OneMoney. Mobile money represents balances stored by a private company, backed by bank deposits, while a CBDC is the national currency itself, issued directly by a central bank. If Zimbabwe were to introduce a digital currency, such as an “e-ZIG”, it would hold the same value as physical Zimbabwe dollars but exist only in electronicform.
What it could mean for Zimbabwe
In a country where confidence in the local currency has been fragile, a carefully designed CBDC could help restore trust. Backed by the central bank, each unit would carry the same legitimacy as notes and coins. An e-ZIG could lower payment costs, expand digital access for the unbanked through mobile phones, and strengthen the Reserve Bank’s ability to monitor and manage money supply. For cross-border trade and remittances, it could also provide a faster, more secure channel.
CBDCs reduce the need for printing and distributing cash, a significant burden for central banks, and can support financial inclusion by offering safe digital payment tools without requiring a traditional bank account. For Zimbabwe, a digital currency could address chronic shortages of physical money, improve the efficiency of the payment system, and rebuild trust in formal financial channels.
Global examples
Several countries have already launched or piloted CBDCs. China has tested its digital yuan (e-CNY) across major cities since 2020, allowing citizens to use it through digital wallets. The Bahamas introduced the Sand Dollar in 2020, becoming the first to fully roll out a CBDC. In 2021, Nigeria introduced the eNaira, which is the first CBDC in Africa; however, its uptake has been slower than expected.
Looking ahead
While currently experimental worldwide, CBDCs mark a key step in the evolution of money. For Zimbabwe, looking into an e-ZIG has both pros and cons. Strong technology, protections against misuse, and, most importantly, developing trust among citizens will all be important for its success. As more countries move towards digital national currencies, it will be important for Zimbabwe’s future financial system to understand how best to integrate this new technology.
