Times Of Swaziland: BANKERS LAUD CBE FOR ENSURING SAFE BANKING

BANKERS LAUD CBE FOR ENSURING SAFE BANKING
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Nhlanganiso Mkhonta on 20/09/2023 15:25:00


MBABANE – The Eswatini Bankers Association (EBA) has commended the efforts of
the Central Bank of Eswatini to ensure that bank notes are safe and secure.
EBA Chief Executive Officer (CEO) Zakhele Lukhele said fraud and forgery could
undermine a currency as a means of exchange and also its value.  “On a broad
basis it can undermine the economy,” he said.   Lukhele was reacting to the
central bank’s latest developments of introducing the new E200 note with
improved security features. The CEO said the central bank has created confidence
in the bank notes as it was known that the larger notes were often targeted by
criminals. The new E200 bank note was launched by the CBE Governor, Dr Phil
Mnisi, during the recently ended Eswatini International Trade Fair (EITF).  The
governor noted that the bank note had improved security features, which included
that when one could try to print a copy of the newly-printed E200 note, it would
just turn black.
Banknote
Other changes included the security thread, which is a metallic-looking strip
positioned vertically, that changes colour from gold to green if the banknote is
being tilted. When viewed from the front, the strip appears broken, but when
viewed from the back, it appears continuous.  The strip has ‘CBE’ printed on
it, which can be seen when viewed from the back or front.
The bank note also has small letters, numbers and/or images that are barely
perceptible with the naked eye, but become visible at low   magnification
(under a loupe). The note also has signatures of the current CBE government and
minister of Finance. However, he clarified that the other E200 notes, which have
signatures of former CBE governors and ministers (of Finance) were still
circulating.
In addition to his reactions, Lukhele said as EBA they were also appreciative of
the efforts to introduce the central bank digital currency (CBDC), although at a
pilot stage at this moment.
He said cash was very expensive to manage, hence the drive to a digital currency
could reduce the costs of transacting and lead to a safer and faster payments
environment. Speaking during the launch of the new E200 bank note, the governor
said as a bank, they were transitioning to CBDC and their aim was to give
technology a platform.
Confidence
He said they were putting money in a plastic card, which, he said, would have
the same value and urged emaSwati to have confidence in it as they had it with
currency in notes. He added that some countries were already using digital
currency and in the country, it would improve financial inclusion and achieve
cross-border payments. He said with the plastic card, one could pay anywhere for
anything, just like they do when using cash. According to the central bank, the
digital currency is a form of central bank issued money that exists only in
digital form.
A CBDC is fully backed by the central bank similar to other forms of central
bank money such as cash. Unlike most privately issued cryptocurrencies, a CBDC,
being digital fiat currency, could be made a legal tender and should be capable
of achieving all four conceptual uses of money;
* As means of exchange.
* As a measure of value.
* As a store value and.
* As a unit of account.
There are two main types of CBDCs, a wholesale CBDC and the retail CBDC:
* A wholesale CBDC is a digital currency issued by the central bank directly to
commercial and other financial institutions, which have reserve accounts at the
central banks.
* A whole CBDC is used by banks for settlement among themselves and is not
accessible to the general public.  A retail CBDC is similar to cash in that it
is available to the wider public.
This means users can be able to pay for service in a retail CBDC.  A retail CBDC
is a digital currency that is made available to the general public and is issued
by the central bank. It differs from private digital currencies in that it
continues to be a liability of the central bank, just like actual fiat currency
(banknotes and coins). A CBDC only exists in digital form, and all transactions
must be completed via a computer, smartphone, or other digital device. The
Central Bank of Eswatini is now conducting research and testing to determine
whether to issue a CBDC and how to do so.