南非国际事务研究所-中国央行数字货币：非洲金融新势力？（英）-2024-36页

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African perspectives

Global insights

China’s Central Bank Digital Currency:

A New Force in African Finance?

LAUREN A JOHNSTON

Occasional

Paper

353

February 2024

2Occasional Paper 353 |

CHINA’S CENTRAL BANK DIGITAL CURRENCY: A NEW FORCE IN AFRICAN FINANCE?

Abstract

In line with changes in technology and societal preferences and innovation, money has

evolved across time. Over recent decades, the emergence of blockchain technologies and

cryptocurrencies has added pressure and built momentum to the adoption of digital

currencies. For several interrelated reasons, among major economies, China– Africa’s most

important trade partner and bilateral creditor – is at the forefront of the digital currency

rollout. Evolution of China’s digital currency, the e-CNY, is likely to have an impact on the

future of Africa’s economic landscape too, as well as socio-economic and political economy

variables beyond. Understanding the benefits, costs and issues of a central bank digital

currency (CBDC), the trajectory of the e-CNY and the broader global monetary reform

context is imperative for broader African interests. Yet, China’s e-CNY is little understood

outside of China, let alone in China. This occasional paper aims to set out the basics of a

CBDC and of China’s e-CNY. African context is added and suggestions are offered on areas

of debate that might be encouraged to bring the CBDC out of monetary halls and into the

arena of public interest debate.

3Occasional Paper 353 |

CHINA’S CENTRAL BANK DIGITAL CURRENCY: A NEW FORCE IN AFRICAN FINANCE?

Introduction

Tangible mediums of exchange have existed for thousands of years in Africa. The cowrie

shell is particularly synonymous with earlier forms of money in West Africa, alongside

other forms of currency, such as silver coins, gold dust, salt bars, brass and copper

rods, horseshoe-shaped manillas (bracelets), cloth and beads.1 In the 18th and 19th

centuries, technological innovation in Europe provided for the emergence and broader

implementation of more formal convertible bank notes, known as fiduciary money,

which dramatically reduced the transaction costs of trade.2

Worldwide today, most money exists only intangibly as entries on bank records in the form

of electronic money (e-money). Yet it retains a theoretical, bank-linked, tangible parallel

upon demand. E-money refers to an ‘electronic store of monetary value on a technical

device that may be widely used for making payments to entities other than the e-money

issuer’.3 E-money dates to 1871 when the US firm Western Union debuted the first electronic

funds transfer and showed that it was possible to pay for goods and services without also

being physically present for the transaction.4

E-money has enabled modern credit cards from the 1950s, automatic teller machines from

the 1980s and cashless payments since the 1990s – steps in e-money application that have

changed payment habits widely.5 Transformations in money across time have been driven

by changing technology and preferences, economic growth and demand to satisfy socio-

economic change.

Digital money is a very recent evolution, and a phrase often mistakenly used inter-

changeably with e-money, although referring to a slightly different concept. Digital

money, unlike e-money, has no parallel physical embodiment and operates on a different

technological tracing and accounting method. Conceptually, its early foundations are

tied to work by economists in the 1980s.6 Operationally, cryptographer and computer

scientist David Chaum is credited with laying the foundations for digital money by having

pioneered the ‘blinding signature’ protocol as a way to encrypt information and data.7

1 Pan-African Payment and Settlement System, ‘About Us,’ https://papss.com/about-us/.

2 Michael Bordo, ‘Central bank digital currency in an historical perspective,’ Centre for Economic Policy Research, October 19, 2021,

https://cepr.org/voxeu/columns/central-bank-digital-currency-historical-perspective; The Bank of England became the sole issuer

of sovereign currency in 1844; and Sweden placed sole power for issuing sovereign currency with Sveriges Riksbank in 1897,

accordingly.

3 Roy Davies, ‘Electronic Money, or E-Money, and Digital Cash,’ February 1, 2019, http://projects.exeter.ac.uk/RDavies/arian/emoney.html.

4 ‘A Brief History of Online Payments - Where Electronic Payments Began,’ Ayoconnect, November 9, 2022,

https://www.ayoconnect.com/blog/brief-history-of-online-payments-where-electronic-payments-began.

5 Alexander Gallas, ‘From shells to bitcoin’, Deutsche Bank, https://www.db.com/what-next/digital-disruption/dossier-payments/

from-shells-to-bitcoin.

6 James Tobin, ‘The case for preserving regulatory distinctions,’ Economic Policy Symposium-jackson Hole (1987): 167-183; Robleh Ali

et al., ‘Innovations in payment technologies and the emergence of digital currencies,’ Bank of England, https://www.

bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/innovations-in-payment-technologies-and-the-emergence-of-

digital-currencies.pdf.

7 John Hyatt, ‘Decoding Crypto: What Was the First Cryptocurrency and Who Created It?,’ Nasdaq, August 18, 2021,

https://www.nasdaq.com/articles/decoding-crypto%3A-what-was-the-first-cryptocurrency-and-who-created-it-2021-08-18.

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AfricanperspectivesGlobalinsightsChina’sCentralBankDigitalCurrency:ANewForceinAfricanFinance?LAURENAJOHNSTONOccasionalPaper353February20242OccasionalPaper353|CHINA’SCENTRALBANKDIGITALCURRENCY:ANEWFORCEINAFRICANFINANCE?AbstractInlinewithchangesintechnologyandsocietalpreferencesandinnovation,moneyhase...

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