Egypt's central bank reports on the digital pound, and the research continues

Egypt's central bank has reported on its digital pound research programme, and the report's message is that the research continues — the programme has not concluded, and a launch decision has not been made. The continuation is the discipline the CBDC question requires, and the discipline is the one the market should respect.

The CBDC question is a question that rewards patience, because the cost of a premature launch is high and the cost of a delayed one is low. A central bank that launches a CBDC without a clear use case produces a project that is technically impressive and economically pointless; a central bank that waits produces the option to launch when the use case emerges. Egypt's continuation of the research, without a launch decision, is the choice to preserve the option, and the choice is the disciplined one.

The reason the discipline matters is that the Egyptian payment market's needs are specific, and the CBDC's fit with those needs is not yet clear. The domestic instant payment rail is addressing the retail payment use case; the cross-border payment needs are being addressed by the digital remittance channels; and the financial inclusion needs are being addressed by the agent banking and digital onboarding. The use case for a CBDC, over and above these, is not yet defined, and the research is the work of defining it.

The implication is that Egypt is approaching the CBDC question with the patience it requires, and the patience is the approach that will produce the right decision. The research will continue, the use case will be defined or not, and the launch decision will be made on the evidence the research produces. The continuation is the discipline, and the discipline is the one the region's other central banks should apply to the same question.