In a recent revelation, the head of the Bank of Mauritius announced their plans for the central bank digital currency (CBDC). Reportedly, the bank is planning to launch the pilot of the CDBC later this year.
According to Harvesh Kumar Seegolam, Governor of the Bank of Mauritius, the country intends to launch the pilot phase of a digital Rupee in November. He added that many of the parameters of the prospective CBDC are already in place.
Speaking at the International Monetary Fund/World Bank Community of Central Bank Technologists meeting held on the main island, the central bank governor highlighted his priorities since he took office in 2020 and included CBDC development in it too. He stated:
As a central banker, I need not stress upon the determining role that CBDCs can play, not only in protecting monetary sovereignty but also in assisting central banks and regulatory authorities on the front of anti-money laundering/combating the financing of terrorism (AML/CFT).
Sources reveal that consultations with International Monetary Fund (IMF) experts regarding the CBDC began the same year and resulted in the production of a feasibility report.
According to Seegolam, Mauritius was the first country to benefit from IMF technical assistance with its CBDC project. The Bank of Mauritius set up a sandbox with an unnamed partner in December to explore potential features and “craft the Digital rupee based on the Mauritian specificities.”
Counting on the potential features of the CBDC, the central bank governor said that the digital Rupee should be “a payment instrument to be made available to one and all.” He added that it will be intermediated to “ensure that commercial banks continue to be fully involved in our CBDC journey.” It will also make monetary policy easier to manage and support financial stability and the digital Rupee will be interest-free.
Seegolam said the Bank of Mauritius “is contemplating” launching a digital rupee pilot phase in November this year. He added that phase two of the project will be the development of its use in cross-border transactions.
In particular, Mauritius has been gradually adopting blockchain technology for several years and is open to innovation. The country regulated digital asset custody licensing and security token offerings in 2019 and was seen as an emerging hub for the technology once.
Notably, CBDCs are becoming an increasing topic of interest due to their potential solution to enhance financial inclusion, reduce costs associated with cash handling, and address the rise of digital currencies, including cryptocurrencies, and the growing interest in the metaverse.
In this regard, The International Monetary Fund (IMF) has also taken various steps to assist the nations in their CBDC journey. With over 40 countries reaching out for assistance, the IMF has engaged with nearly 30 countries in the past two years alone, highlighting the urgent need for guidance in navigating the complexities of CBDCs.
Earlier this month, the IMF announced the release of a comprehensive handbook on central bank digital currencies (CBDCs) in response to the unprecedented level of interest and demand from central banks around the world. However, the IMF is not the only international organization to be providing help in CBDCs as the G7 also announced to extend their guidance to developing nations to help their CBDC exploration.