African country: The Kingdom of Eswatini’s (former Swaziland) Central Bank (CBE) has unveiled a design paper illustrating its proposed central bank digital currency. Notably, the Eswatini CBDC is the digitized Lilangeni (formerly the Swazi Lilangeni).

Accordingly, the digital Lilangeni will serve for everyday retail use. Instead of using a distributed ledger framework (like a blockchain where all transactions on the network are transparent), it would use a distributed database. 

As stated by Kiffmeister, “Although it would not be run on a distributed ledger technology (DLT) platform, it would be built on a distributed database, operated and permissioned by the CBE.”

The Eswatini CBDC: the Digitized Lilangeni Use Cases

Licensed financial institutions in the country will manage the digital Lilangeni’s onboarding and issue CBDC smart cards. Accordingly, these cards are linked to online or hardware wallets containing the tokens.

In addition, these institutions mediating the CBDC launch will run according to the CBE’s guidelines. Significantly, the process would align with international Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws.

Interestingly, retail payments with the card can be automated while restrictions can be placed on spending by minors.

It is noteworthy that the digital Lilangeni will not overhaul cash use completely. “A digital lilangeni would be fully interoperable with the existing payment methods and wholesale and retail infrastructure, and be available 24/7/365 in a (near) real-time manner,” says Kiffmeister.

Furthermore, the CBDC’s design highlights that it is designed for transactions (payments) and not for storing. As stated by Kiffmeister, “It would be unremunerated, as it will be primarily aimed to be a means of payment and not a savings vehicle.”

 So, it focuses on liquidity ensuring seamless, readily available transactions. Besides, storing the token has no benefit for long-term holding.

Download Eswatini’s CBDC design paper here!