The world’s payment systems are being pushed toward a difficult question:
What if cross-border settlement could happen directly in central bank money, instantly, transparently, and with fewer intermediaries?
For decades, international payments have moved through layered systems of correspondent banks, clearing arrangements, compliance checks, foreign exchange conversions, and settlement institutions. These systems have supported global commerce, but they remain slow, expensive, opaque, and often difficult for smaller economies, SMEs, migrants, and low-income households to navigate.
For Africa, the problem is especially painful.
A trader may move goods across borders faster than payments settle. A diaspora worker may lose significant value to remittance fees. A FinTech may build an efficient front-end product but still depend on slow back-end settlement systems. An SME may wait days for funds that should be available immediately.
This is why central bank digital currencies, especially wholesale CBDCs, have become one of the most important experiments in the future of payments.
The promise is bold: Use digital central bank money to make cross-border settlement faster, cheaper, safer, and more transparent. But the risks are equally serious.
CBDCs are not magic. They involve monetary sovereignty, cybersecurity, governance, financial stability, sanctions compliance, privacy, interoperability, and geopolitics. For Africa, the question is not whether CBDCs sound futuristic. The real question is whether they can solve practical problems better than upgraded instant payment systems, mobile money interoperability, PAPSS, ISO 20022, and regional settlement platforms.
That is the debate. And it matters.
A central bank digital currency is a digital form of money issued by a central bank. Retail CBDCs are designed for public use by individuals and businesses. Wholesale CBDCs are designed mainly for financial institutions and settlement between banks or regulated participants.
In cross-border payments, most serious CBDC experiments focus on the wholesale side.
The logic is clear. If central banks can issue digital settlement assets on shared or interoperable platforms, banks and financial institutions could potentially settle payments directly across currencies without relying heavily on long correspondent banking chains.
That could reduce:
- intermediaries,
- settlement delays,
- reconciliation problems,
- foreign exchange friction,
- and opacity in transaction flows.
This is where projects such as BIS mBridge and Project Dunbar became globally significant.
Project mBridge was one of the world’s most closely watched multi-CBDC experiments. It explored a shared platform where participating central banks and commercial banks could use digital central bank money for instant cross-border payments and foreign exchange settlement. The BIS said mBridge reached minimum viable product stage in mid-2024, with the project built on distributed ledger technology to enable instant cross-border payments and settlement. (Bank for International Settlements)
That milestone mattered because it suggested multi-CBDC systems were moving beyond theory.
In a traditional correspondent banking model, a payment may pass through several institutions before reaching the final recipient. In a multi-CBDC platform, the ambition is to allow participating institutions to transact more directly using digital representations of central bank money.
The potential efficiency gains are significant.
But mBridge also showed how politically sensitive this space can become. In October 2024, Reuters reported that BIS would leave the mBridge platform, with BIS General Manager Agustín Carstens saying the project was ready to continue without BIS involvement, while also stressing that the project was not mature enough for commercial operation and denying that it was designed to bypass sanctions. (Reuters)
That moment revealed an important truth: CBDC infrastructure is not only technical infrastructure.
It is geopolitical infrastructure.
Project Dunbar offers another important lesson.
Led by the BIS Innovation Hub with central banks including Australia, Malaysia, Singapore, and South Africa, Project Dunbar explored how multiple central banks could issue CBDCs on a shared platform for international settlement. The project identified key design challenges for multi-CBDC platforms and proposed practical solutions. (Bank for International Settlements)
The Reserve Bank of Australia’s Project Dunbar report explained that multi-CBDC platforms could make cross-border payments faster, cheaper, and safer by reducing reliance on intermediaries and simplifying settlement processes. (Reserve Bank of Australia)
That is the core attraction.
Today’s cross-border settlement model often resembles a relay race. Each institution passes the transaction to another. Each layer adds cost, risk, and delay. Multi-CBDC experiments ask whether settlement can become more like a direct bridge.
For Africa, that question is powerful.
The continent’s cross-border payment challenges are well known.
Many African economies face:
- high remittance costs,
- fragmented regulations,
- multiple currencies,
- foreign exchange constraints,
- limited interoperability,
- low correspondent banking access,
- and expensive settlement routes.
In some cases, African transactions still rely on external hard currencies and offshore intermediaries even when both parties are located on the continent. This increases cost and weakens regional financial autonomy.
CBDC-based settlement could theoretically support:
- direct local-currency settlement,
- faster interbank payments,
- more transparent foreign exchange execution,
- reduced intermediary dependency,
- and improved auditability.
But theory is not enough.
Africa must assess whether CBDCs are the best path for each problem.
In many cases, faster progress may come from improving existing payment rails:
- instant payment systems,
- PAPSS,
- mobile money interoperability,
- regional switches,
- ISO 20022 migration,
- and digital public infrastructure.
CBDCs should therefore be treated as one potential tool, not the whole toolbox.
Transparency is one of the strongest arguments for CBDC-based settlement.
Digital central bank money can potentially create clearer audit trails, improve settlement visibility, reduce reconciliation failures, and strengthen regulatory oversight. In cross-border trade, this could help regulators monitor flows more effectively while giving institutions clearer transaction status.
For businesses, greater transparency could mean fewer unexplained delays.
For regulators, it could support better financial integrity.
For banks, it could reduce settlement uncertainty.
For SMEs, it could eventually lower friction.
But transparency also raises privacy and governance questions.
Who sees the data?
Who controls access?
How are disputes resolved?
How is commercially sensitive information protected?
How are sanctions, AML rules, and national regulations enforced across jurisdictions?
These are not minor details. They are the foundation of trust. Cost reduction is another major promise.
If multi-CBDC systems reduce the number of intermediaries involved in cross-border transactions, costs could fall. This matters deeply for Africa, where transfer fees remain a painful burden for remittances, SMEs, and regional trade.
But CBDC systems also have costs of their own:
- technology development,
- cybersecurity,
- legal reform,
- participant onboarding,
- governance structures,
- central bank capacity,
- and infrastructure upgrades.
A poorly designed CBDC system could be expensive without delivering enough adoption.
This is why African central banks must be careful.
The question should not be “Can we launch a CBDC?”
The better question is:
“What problem are we solving, and is CBDC the best solution?”
Kenya’s central bank consultation, for example, received views that CBDCs could improve efficiency, interoperability, financial inclusion, and cross-border payments, but respondents also raised concerns about privacy, anonymity, cybersecurity, and infrastructure implementation costs. (Central Bank of Kenya)
That balance is exactly what Africa needs.
Ambition with caution. Innovation with discipline.
The biggest risk is building shiny infrastructure that does not solve ordinary people’s problems.
A CBDC that improves wholesale settlement but does not reduce remittance costs, support SMEs, improve liquidity, or strengthen inclusion may remain a central-bank experiment rather than a development breakthrough.
For Africa, the test must be practical.
Can CBDC-linked settlement:
- reduce transfer costs?
- speed up SME payments?
- support AfCFTA trade?
- improve remittance flows?
- strengthen local-currency settlement?
- reduce dependency on external intermediaries?
- protect users and institutions from cyber risk?
- integrate with mobile money and existing payment systems?
If the answer is yes, CBDCs may become powerful infrastructure.
If not, other payment modernization tools may deliver better outcomes faster.
There is also a major inclusion question.
Most CBDC debates happen among central banks, technologists, economists, and financial institutions. But Africa’s payment revolution is driven heavily by ordinary users:
- mobile money customers,
- informal traders,
- SMEs,
- rural households,
- women entrepreneurs,
- cross-border traders,
- and diaspora families.
The future system must serve them.
Wholesale CBDCs may operate behind the scenes, but their value should eventually appear in:
- lower fees,
- faster settlement,
- better transparency,
- stronger liquidity,
- and more reliable cross-border payments.
If citizens cannot feel the benefit, the infrastructure has not fulfilled its purpose.
For HiPipo Money, the CBDC story is important because it sits at the intersection of technology, sovereignty, inclusion, and financial infrastructure. Africa must not be left behind in global payment experiments. But the continent must also avoid adopting technologies because they sound advanced rather than because they solve real problems.
This is where platforms such as the Digital Impact Awards Africa, Include Everyone, Women in FinTech, and broader financial inclusion ecosystems can help shape the debate. Africa needs conversations that connect central bank innovation to human impact, SME growth, remittance affordability, and regional trade.
CBDCs may become part of the future.
But the future should not be built for central banks alone.
It should be built for economies.
For traders.
For families.
For FinTechs.
For SMEs.
For women.
For young entrepreneurs.
For a continent that needs money to move faster, cheaper, safer, and with greater dignity.
The central bank money bridge may be coming.
But Africa must cross it carefully, with its people, not just its institutions, in mind.
