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Moonah’s Comments on Rwanda’s CBDC Research Paper


May 18, 2024

As Rwanda delves into the possibilities offered by a Central Bank Digital Currency (CBDC), Moonah, with its unique platform for fiat-backed cross-border payments, is well-equipped to provide insights. We aim to facilitate not only enhanced business transactions across Rwanda and Africa but also offer comprehensive visibility into these transactions for governments and regulators. The National Bank of Rwanda’s (BNR) initiative to explore CBDC closely aligns with our commitment to increasing the speed, cost-effectiveness, transparency, and inclusivity of cross-border payments. Below, we share our initial thoughts on the CBDC research paper and discuss its implications for our operations.

With the majority of global central banks, over 90%, now investigating the transformative potential of CBDCs, the financial landscape is on the verge of a revolution. This shift towards digital currencies is poised to make transactions nearly instantaneous and significantly cheaper, thereby enhancing financial inclusivity and efficiency across the board (IMF Report, Blockworks - Banks Exploring CBDC).

The BNR’s CBDC research identifies numerous opportunities to significantly enhance Rwanda’s financial infrastructure. One area of particular relevance to Moonah is the development of more efficient cross-border remittances, which could dramatically reduce the costs and complexities associated with international business transactions. As the Rwanda CBDC Report suggests, "Retail cross-border CBDC could help alleviate high prices and existing frictions, presenting an optimal solution for such interactions."(BNR, 2024, p. 17).

Despite the opportunities, achieving a globally interoperable CBDC presents substantial challenges, including the need to align various international payment systems and to navigate complex regulatory environments. While regional efforts like the East African Monetary Union provide valuable starting points, they may not completely solve the broader challenges of global financial integration. Moonah recognizes that private companies like ours can play a crucial role in providing essential on and off-ramps while adhering to all government monitoring requirements and global FATF standards.

Moreover, public and merchant adoption emerges as a potential challenge highlighted in the CBDC research. By integrating established, trusted stablecoins within the CBDC framework, Moonah can help mitigate these adoption barriers, offering familiar platforms that enhance user trust and facilitate a smoother transition to new digital payment systems.

On page 23 of the CBDC research, the BNR underscores the importance of the private sector in developing interoperability solutions, including smart contracts and token-based instruments. Moonah's platform is ideally positioned to lead this initiative, offering secure, compliant interfaces that bridge traditional financial systems with the digital economy.

The exploration of a CBDC in Rwanda represents a pivotal step towards modernizing the nation’s financial infrastructure. Moonah is excited to participate in this transformative journey, leveraging our expertise in digital payments to contribute to a more efficient, inclusive, and innovative payment ecosystem. As we continue our collaboration with central banks, we are committed to shaping a financial system that not only meets today’s demands but is also adaptable to future challenges and opportunities.