Cryptocurrencies risky – governor

MBABANE – Central Bank of Eswatini Governor Majozi Sithole has said consumer protection is essential when looking into the issue of cryptocurrencies in the country.

During his Annual Monetary Policy Statement yesterday, he said cryptocurrencies had received increased media attention with reports on price movements, news on millions lost to investment scams and very high volatility, and the acquisition of non-fungible (NFT) tokens for millions of Dollars.

He said the bank has accelerated its efforts to investigate crypto assets and their implication on the local financial system. “The bank’s research efforts include understanding the different types of crypto assets, their use cases, local adoption, potential benefits, potential risks and how they interact with the traditional financial system. Crypto assets promise several benefits including enhancing financial inclusion, peer-to-peer payments and improving the efficiency and cost of cross-border payments,” he said.

The governor said like any other technology, cryptocurrencies could introduce new risks to the financial system including risks relating to consumer protection, market integrity, payment systems, financial stability and money laundering and terrorist financing.

Risks

“It will be important for the bank to ensure that the full range of risks associated with crypto assets are identified and addressed in line with the bank’s mandate for financial integrity and stability. These risks also underscore the importance of ensuring that innovation is accompanied by effective public policy frameworks to ensure consumer protection and preserve trust in the financial system.”

He said the objective of the bank’s efforts was not to hinder innovation but to support responsible innovation while preserving consumer confidence and trust in the Eswatini financial system.