Thanks to advancements in Fintech, digital payment platforms are increasingly replacing traditional cash-based solutions. This issue was highlighted by Joseph Mwanamveka, Malawi’s Minister of Finance, Economic Planning and Development, at the 2019 Monetary Policy Conference.
Staged by the Reserve Bank of Malawai (RBM) at Nkopola Lodge in Mangochi in November 2019, Malawi’s 2019 Monetary Policy Conference focused on cryptocurrencies and monetary policy. Minister Mwanamveka was greeted by Thomson Mpinganjira, founder of FDH Bank and its parent company FDH Financial Holdings, whose professional interests include innovative technologies and digital disrupters, including cryptocurrencies.
As a leading Malawian financial institution, FDH Bank is at the forefront of technological advancements and innovation in the country’s digital banking sector, providing a variety of groundbreaking digital banking products and services and promoting financial inclusion for Malawians who live and work in the country’s remotest regions.
Rising Interest in Cryptocurrencies in Malawi
Minister Mwanamveka explained that as the latest form of digital currency in private Fintech, cryptocurrencies were quickly gaining traction with the public, increasingly attracting interest from international bodies, policy makers, and private organisations all over the world. He applauded RBM for making cryptocurrencies the focus of the annual Monetary Policy Conference.
Cryptocurrencies began within the gambling industry, with players using digital ‘coins’ that could be redeemed with other service providers, enabling users to cash in their prizes. Minister Mwanamveka pointed out that cryptocurrency is not actually legal tender. Initially used in gambling as a mode of transacting in other services, cryptocurrency is now used globally. Minister Mwanamveka extrapolated that since cryptocurrencies are a borderless mode of digital payment, Malawi is not impervious to their surge in popularity.
He expressed concern that Malawians have become involved in this form of online trading, since cryptocurrencies are not regulated by RBM. Indeed, RBM highlighted this fact in 2019, releasing a statement pointing out that cryptocurrencies are not recognised legal tender within Malawi, urging members of the public involved in trading cryptocurrencies to proceed with caution.
Minister Mwanamveka acknowledged that, in this digital age, it is not easy to prevent the public exploring decentralised financial innovations. He explained that it was only by keeping up to date with market trends, such as digital currencies, that the Malawian Government could safeguard monetary policy, supporting the creation of safe and profitable domestic investment opportunities as well as an internationally integrated payment system.
The overriding objective of the 2019 Malawian Monetary Policy Conference was to educate delegates from across the country’s financial sector, arming them with information and enabling them to make informed decisions about trading in decentralised currencies, which could pave the way for unregulated money creation, sparking domestic inflation.
Minister Mwanamveka explained that, from the fiscal side, the Malawian Government had made major efforts to support inflation stabilisation. He said that with continuing advancement in Fintech, economies will always face new innovations and products, challenging key roles of monetary authorities. This underlines the need to remain constantly alert to emerging developments in financial systems, remaining proactive and implementing various regulations and mechanisms to monitor and safeguard innovations, protecting them from new risks and fragmentation.
Dalitso Kabambe, Governor of RBM, pointed out that the world of Fintech is fastmoving, with financial institutions engaging tech companies to provide financial products and services directly. He explained that traditional fiscal systems such as central and commercial banks, which had served the world community relatively well over past decades, were undergoing radical operational changes and structural metamorphosis.
Governor Kabambe pointed out that Apple, Google, Facebook, Alibaba, and Amazon – the big five global tech conglomerates – had all announced plans to launch their own digital currencies.
At a national level, countries such as Switzerland, Germany, Singapore and Japan now recognise cryptocurrencies as legal tender, though this digital payment form remains unrecognised by the US and Canadian governments, with China and Russia banning cryptocurrencies completely. Governments within Africa, including Malawi, have taken a cautious approach to this new and unchartered financial territory.