Economist Betchani Tchereni has asked the Reserve Bank of Malawi (RBM) to look into the possibilities of introducing digital currency, warning that failure to do that could lead to tax revenue losses and render the central bank irrelevant.

He outlined the challenges during his presentation at the RBM Monetary Policy Conference in Lilongwe on Friday.

Tchereni: Some domestic trade will also
be concluded in cryptocurrency

The presentation was titled central bank digital currency: Is it time for digital Malawi kwacha yet?

Tchereni, who is Malawi University of Business and Applied Science associate professor of economics, said if local transactions of digital currency are higher than what is expected and RBM does not introduce its electronic currency, their could be serious implications.

He said: “Payments via click of buttons through some blockchain requires no physicality. That will, therefore, universalise payments.

“Before we realise, imports will be paid in cryptocurrency, some domestic trade will also be concluded in cryptocurrency. This is important as tax revenues may be lost.”

In an interview to expound more on his presentation, Tchereni said cryptocurrency as a universalised system, means the Malawi Revenue Authority (MRA) might not have control over some transactions.

He said: “When people are transacting in cryptocurrency, it means that MRA might have problems to collect taxes. Because of those problems, there will likely be revenue losses.

“Due to these potential challenges, the country should look at the possibility of having its digital currency issued by the RBM.”

On rendering the RBM irrelevant, Tchereni said if people continue to use privately issued cryptocurrency, the economy can come to a point where the RBM may be issuing money not useful for any transaction.

“In that case, you will see that the central bank has become irrelevant because money is being issued by somebody else in form of digital currency,” he said.

Meanwhile, RBM Governor Wilson Banda said in an interview that the central bank will review all proposals submitted during the two-day conference and consider some as part of its policy direction.

“Where we need to shift policy, we will do so. Where we need to amend policy, we are going to do that,” he said.

Hosted under the theme ‘Monetary policy in the 2020s’, the conference centred on the role of monetary and exchange rate policy, modernising monetary policy and the central bank digital currencies state.

Digital currency is money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the Internet. The currency may be recorded on a distributed database on the Internet and a centralised electronic computer database owned by a company or bank.

The post Economist cautions RBM on digital currency threat appeared first on The Nation Online.