Mauritius has made significant progress in central bank digital currencies, with the Bank of Mauritius piloting a retail Digital Rupee since 2024, supported by the International Monetary Fund. This puts Mauritius ahead of many peers in terms of digital currency development. The Digital Rupee is a digital cash instrument issued and distributed through commercial banks, aiming to improve domestic payments efficiency and financial inclusion.
A retail central bank digital currency, like the Digital Rupee, solves domestic payment problems, but a larger opportunity exists in wholesale settlement between banks and central banks. Wholesale settlement assets enable banks and central banks to settle obligations across currencies and borders without correspondent accounts. The Bank of Mauritius plans to add cross-border functionality to the Digital Rupee after the retail pilot, presenting an opportunity for Mauritius to shape this aspect deliberately.
The Bank for International Settlements and the Institute of International Finance have demonstrated the potential of tokenized commercial bank deposits and central bank reserves for wholesale cross-border payments through Project Agóra. A similar proof point exists in Africa, with the Pan-African Payment and Settlement System connecting 24 central banks, over 200 commercial banks, and fintechs across 30 countries. This system has significantly reduced cross-border payment costs and processing times.
The Pan-African Payment and Settlement System has achieved impressive results, with cross-border payments settling in an average of seven seconds, a 92-95% cost reduction, and transaction volumes up over 1,000% in the past year. Despite this, Mauritius is not yet a member of the system, which is a strategic priority for the country's digital currency development.
If Mauritius joins the Pan-African Payment and Settlement System, it can leverage the live infrastructure for its Digital Rupee's cross-border phase, avoiding the need for bespoke bilateral links. This would enable Mauritius to settle cross-border transactions efficiently and reduce the risk of duplicating existing correspondent banking architectures.
To move forward, the Bank of Mauritius should pursue membership in the Pan-African Payment and Settlement System and seek observer or participant status in the next phase of Project Agóra-style wholesale experimentation. This will ensure the Digital Rupee's cross-border design is compatible with tokenized-reserve standards set by major central banks.
The development of central bank digital currencies in Mauritius highlights the need for collaboration and strategic planning to fully leverage the potential of digital currencies. By addressing the existing gaps and taking concrete next steps, Mauritius can position itself at the forefront of digital currency innovation in Africa.
Key points
- Mauritius has a live retail central bank digital currency pilot, but needs to join the Pan-African Payment and Settlement System to fully leverage its digital currency.
- The Pan-African Payment and Settlement System has achieved significant reductions in cross-border payment costs and processing times.
- Mauritius should pursue membership in the Pan-African Payment and Settlement System and seek observer or participant status in Project Agóra-style wholesale experimentation.
