The Reserve Bank of Zimbabwe (RBZ) has banned all financial institutions from transacting cryptocurrencies in the country, according to reports from NewsDay. The RBZ’s Director and Registrar of Banking Institutions, Norman Mataruka, issued a directive to all Zimbabwean financial institutions to cease dealing with crypto-related exchanges holding the accounts of people dealing with crypto assets within the next 60 days to shut down all the active crypto-related accounts.
According to Mataruka, RBZ intends to take strict measures to protect its citizens from the fraudulent activities associated with crypto markets and safeguard the integrity and safety of its financial system in the country. In other words, keep its monopoly control on the money supply and prevent any competition. The regulator is concerned with the strong linkages and interconnectedness that exist between the cryptocurrencies and standard payment systems. In other words it fears losing control of its ability to inflate and steal value from its own currency, as it has done many times in the past, impoverishing the people.
Since RBZ is a so-called “custodian of public trust”, its obligation is to ensure that the payment systems in the country are protected. The central bank governor John Mangudya has also warned the public from getting into the crypto-related trading.
The Reserve Bank of India (RBI) also issued a similar ban recently warning all domestic financial institutions from dealing with crypto-related entities or individuals. Furthermore, the Central bank of Kenya also issued a directive warning the public from the risks linked to crypto assets such as Bitcoin (BTC). At the moment, the RBZ considers all cryptocurrency payments as illegal until a regulatory framework for the cryptocurrency market is developed.
Though Africa and other third world countries say they are ready to embrace the innovative technologies such as crypto assets and blockchain as alternative payment mechanisms to the expensive traditional banking system, they are aware that allowing crypto payments would render African central banks entirely obsolete since African currencies are known to devolve into hyperinflation over and over again.
But the abundance of smartphones across the globe has enabled easy access to the optional payment services that have become prevalent particularly among the young generation. However, the tech-revolution in the third world is on the rise since 2017 and governments could change their approach and attitude towards the booming crypto markets.