Eswatini Central Bank Unveils Digital Lilangeni Design Paper

According to Cointelegraph, the Central Bank of the Kingdom of Eswatini has released a design paper detailing its potential central bank digital currency (CBDC), the digital lilangeni. The digital lilangeni is envisioned as a tokenized retail CBDC operating on a distributed database rather than a distributed ledger. The design paper outlines that the CBDC would feature hosted online wallets managed by financial institutions and hard wallets, likely in the form of smart cards, which could function without internet access. The currency would be intermediated, with financial institutions distributing it to users through infrastructure operated by the central bank. The digital lilangeni would offer pseudo-anonymity, preserving privacy while meeting Know Your Customer and Anti-Money Laundering requirements. Additionally, payments could be programmable at the wallet level to enable automated transactions or impose spending restrictions, such as for children. Despite efforts to promote a “cash-lite” society, cash remains the dominant payment method in Eswatini. The central bank phased out checks in 2022 and aims to ensure the digital lilangeni's interoperability within the existing electronic money framework and international standards. The lilangeni is pegged to the South African rand. The CBDC was developed in collaboration with Giesecke+Devrient using its Filia CBDC technology and has undergone proof-of-concept, sandboxed, and live pilot projects. Staff training delays were noted as a challenge that would need addressing for broader implementation. The Eswatini CBDC proposal shares similarities with Rwanda’s envisioned digital currency, both being token-based and operating on distributed databases. Programmability, while less favored in developed economies, could offer advantages in less developed regions. For instance, in Kazakhstan, programmable CBDCs are seen as tools to combat corruption.