United States dollar bank notes. (-)

The Central Bank and Ministry of Finance have signed a memorandum of understanding aimed to discourage physical transportation of bulky cash and promote digital transfers.

The deal was inked between Samuel Yanga Mikaya the 1st Deputy Governor of the Central Bank, and Malual Tap Dieu, the 1st Undersecretary for Finance.

In a joint statement, the two officials say this framework a significant development for the financial sector.

This is as it aims to pave the way for substantial reforms in the banking system, to improve efficiency and security in financial transactions.

It will entail streamlining financial transactions by reducing the need to carry large sums of physical cash and promoting digital transfers.

In his statement, the 1st Deputy Governor of the central bank Samuel Yanga the new system will impose limits on the amount of physical cash individuals can carry to reduce potential risks for clients.

Meanwhile, 1st Undersecretary for Finance Malual Tap, announced that both institutions will soon issue a formal circular giving details of the new banking system.

He added that that “the current practice of carrying bulky cash poses significant security risks and the new system aims to mitigate these threats by promoting safer digital alternatives.”

This MOU represents a critical step towards modernizing the banking sector and enhancing financial security, setting the stage for more efficient and secure economic transactions in the future.

Overall intention of the initiative is to ensure better management of government funds, improve liquidity in the financial system, and enhance overall fiscal stability.

This is as it is expected to ensure enough liquidity in the financial system to meet the government’s short-term obligations and to manage any cash flow fluctuations.

This will in turn stabilize interest rates, control inflation, and support economic growth.