Morocco is heading towards the future of cryptocurrencies
- Climate shocks and inflation in the African landscape
- A shift in approach to cryptoassets
- Reflections on the digital implications and the integration of crypto-assets
Abdellatif Jouahri, head of Bank Al-Maghrib (BAM), starred at the 4th edition of the High Level Regional Symposium on Financial Stability in Rabat, announcing that Morocco plans to adopt a regulatory framework governing cryptoassets.
On this occasion, the theme of the first edition of the symposium in the post-pandemic era was ‘Financial stability in Africa in the face of geo-economic uncertainties and emerging risks’, in order to give visibility to the adversities that have been faced in recent years.
In addition to the pandemic, there are other issues affecting the present, such as conflicts in different parts of the world that continue to escalate, various large-scale weather phenomena, and the resurgence of inflation.
Jouahri said that a variety of profound changes continue to reshape the global economic, social and financial landscape, such as geo-economic fragmentation, digitalisation and the development of artificial intelligence. In turn, the pandemic has led to worsening debt levels, raising concerns about the sustainability of public finances in many countries.
Climate shocks and inflation in the African landscape
Due to rising inflation, central banks have embarked on a cycle of monetary tightening, according to the BAM wali, the fastest and most synchronised in history. Moreover, even if inflation has been brought to a halt without causing an economic recession, risks to financial stability remain.
Jouahri stressed that in Africa, the impact of these uncertainties and changes is very clear, as many countries on the continent are suffering the effects of global warming even if they contribute minimally to greenhouse gas emissions.
With regard to Morocco, climate change is continuing with a succession of years of drought, as well as recurrent flooding that has affected several regions in the south of the country.
It should be added that financial sector regulators are particularly sensitive to this climate risk. As a result, several initiatives have been launched to incorporate the environmental dimension into economic strategies, decision-making and financial regulatory frameworks. Accordingly, Moroccan banks have been invited by the BAM to integrate climate risk into their governance and risk management systems, as well as into their investment and financing strategies. Overall, the challenge of global warming for the financial market has been taken into account.
As a result, the World Bank has estimated Morocco's investment needs at around 78 billion dollars for the period between 2022 and 2050. In order to reach this figure, the Kingdom has developed a national strategy for strengthening climate finance by 2030 and is also seeking private funds and international donors. Thanks to these concrete policies, the country has been able to benefit from the International Monetary Fund (IMF) to the tune of approximately 1.3 billion dollars under the Resilience and Sustainability Fund.
A shift in approach to cryptoassets
Morocco had already faced the challenge of cryptoassets in 2017, when Bank Al-Maghrib and the Moroccan Securities Market Commission (AMMC) issued a joint statement warning the public about the risks of using cryptocurrencies in the country. In turn, the authorities noted that users of cryptocurrencies such as Bitcoin, Ethereum and others could face legal sanctions.
Although they initially had a prohibitive approach towards this modality, it was only after assessing that it was a safe and internationally regulated development that Moroccan authorities began to lean towards cryptoassets with a regulatory approach aimed at ensuring adequate protection of users and investors.
In light of this, Bank Al-Maghrib (BAM) has prepared, with the support of the World Bank, a new draft law regulating cryptoassets, which are now moving towards a process of adoption.
Reflections on the digital implications and the integration of crypto-assets
With regard to central banks' digital currencies, an attempt will be made to define the extent to which this new form of money would contribute to the country's public and essentially financial objectives.
It should be added that the CBDC digital currencies project was launched three years ago with the aim, in this case, of anticipating and guiding Bank Al-Maghrib's strategic choices and decisions. This project also aims to enable learning about these important new global developments.
Jouahri went on to say, with regard to crypto-assets, that ‘this is a long-term undertaking that must take into account the national socio-economic context, the evolution of the regional and international environment, as well as the impact on certain missions of the Central Bank, including monetary policy and financial stability’.
On cybersecurity, Bank Al-Maghrib has created a dedicated community led by the financial ecosystem and regulators. At the international level, the Bank has joined a number of bodies specialising in the field of cybersecurity and enabling the sharing of experiences and the exchange of information.
Jouahri concluded by stating that combined thinking and efforts on these issues at the continent level are essential to fully understand the benefits of digitalisation, while ensuring that the risks related to these new developments are reduced.
This development marks an important milestone for Morocco, which had previously banned cryptocurrencies. As the bill continues its legislative path, Bank Al-Maghrib continues to demonstrate its ambition to adapt to the transformations of the global financial context, without neglecting the stability of the national financial system.