It’s well known in the banking sector that the emergence of blockchain is most likely to trigger a revolution in banking. However, it is in the hands of central banks that the technology could reach its true potential.
No wonder the Reserve Bank of Zimbabwe (RBZ) is rapidly extending its interest in the blockchain technology. This is according to the Deputy Governor of the central bank, Dr. Jesimen Chipika who said:
Blockchain technology is high on the Central Bank’s agenda. Innovation has a way of running ahead of regulation, but we refuse to be left behind. We want to understand and adapt
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This comes after a couple of months ago, the RBZ’s governor said that the central bank had set the wheels in motion to conduct research on blockchain technology and see its costs and benefits to the financial sector.
RBZ is being drawn by the idea of fast, efficient digital money that does not carry the costs of handling cash and that can be tracked as it moves through the financial system. This promises benefits in terms of improving efficiency in payments, preventing fraud, and executing monetary policy effectively. So it is not a surprise that the apathy of RBZ towards blockchain technology seems to be waning.
The financial sector may not yet achieve efficiency with blockchain because of the technology’s high energy consumption. According to a research by the Dutch central bank, blockchain technology is not yet suitable for the existing financial payment infrastructure due to its insufficient ability to scale for large volumes of transactions and other issues. Even if the issue of energy consumption was inconsequential, Zimbabwe’s electricity production capacity is too low for the current level of consumption so confirmation and verification of transactions could be awfully slow.
While blockchain and its various challenges are still being explored, the potential impact of the technology is increasingly becoming evident. Accenture research estimates that blockchain-based database systems can reduce 70% of central finance reporting costs, lower compliance costs by 30–50%, and provide potential savings of 50% on business operations.
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