An International Monetary Fund (IMF) technical assistance report assessed Project Sunbird, a joint Common Monetary Area initiative exploring wholesale central bank digital currency for regional transactions.
The project seeks to reduce cross-border payment costs, accelerate settlements and limit dependence on correspondent banks.
However, the IMF report found that earlier assessments concentrated heavily on retail payments and did not sufficiently examine wholesale-market challenges.
Those challenges include liquidity constraints, foreign-exchange limits, prefunding requirements, currency-conversion costs and reliance on currencies from outside the Common Monetary Area.
The IMF recommended updating the project’s diagnostic framework to examine how liquidity, collateral and settlements operate across interbank, foreign-exchange, securities and money markets.
Project Sunbird should also add specialists with expertise in liquidity management, foreign-exchange operations, securities settlement, bond markets and monetary operations.
Workshop participants identified automated regulatory compliance, low-value transfers and expanded access for non-bank financial institutions as possible uses for wholesale digital currency.
Cross-border transactions currently face delays caused by duplicated anti-money laundering checks, complex balance-of-payments reporting and inconsistent regulatory codes.
Technology could automate some checks and reduce manual intervention, but the IMF cautioned that digital currency alone would not resolve regulatory differences among participating countries.
Expanding access to central bank settlement systems could increase competition by allowing non-bank institutions and foreign entities to participate more directly.
However, broader access would require strong regulation and supervision to protect financial stability.
The IMF also identified governance challenges, including high staff turnover and limited time allocated to Project Sunbird. Some team members devote only 1% to 10% of working time to the initiative.
The Report recommended establishing a steering committee comprising senior representatives from each central bank, allocating more dedicated personnel and clarifying responsibilities.
Wholesale digital currency could improve settlements and indirectly lower the cost of remittances, particularly for eSwatini and Lesotho, which depend heavily on transfers from SA.
The IMF stressed that the technology was not a universal solution and should be assessed against upgrades to existing payment infrastructure before implementation decisions were taken.
–IMF/ChannelAfrica–
