Pan-African Payment and Settlement System (PAPSS) unveils a continental currency exchange marketplace, aiming to strengthen trade within Africa.
The Pan-African Payment and Settlement System (PAPSS) has unveiled the PAPSS African Currency Marketplace (PACM), a groundbreaking platform designed to facilitate the direct, peer-to-peer exchange of African currencies in real-time [1][2][4]. This innovative marketplace aims to address the persistent currency convertibility challenges in Africa by eliminating the need for foreign exchange intermediaries, thereby lowering transaction costs and enhancing liquidity for seamless intra-African transactions [2][5].
PACM operates like a stock exchange for African currencies, enabling individuals and businesses to swap these currencies smoothly and instantly without the need for conversion via foreign currencies such as the US dollar or euro [1][2][4]. By integrating with the broader PAPSS infrastructure, which connects African central banks and promotes real-time, cost-effective cross-border payments in local currencies, the PACM contributes to deeper financial integration across Africa [3].
This integration is crucial to unlocking the potential of the African Continental Free Trade Area (AfCFTA), fostering intra-African trade, investment, and economic growth [3]. More than 80 African corporates participated in a pilot, trading across 12 currency pairs, with all transactions settled in local currencies [6].
PACM aligns with local regulatory frameworks and creates a single liquidity pool for African currencies [7]. The platform's operation supports the AfCFTA's goal of a sovereign and self-reliant financial system. The estimated annual cost of workarounds, including fees and delays, related to currency conversion within Africa is $5 billion [8]. By reducing these costs, PACM could potentially help African businesses free up trapped capital and reduce their reliance on third currencies for regional trade [9].
Launched in 2022, PAPSS is already facilitating real-time cross-border payments across 17 countries, 14 national switches, and over 150 commercial banks [10]. The system is built on Interstellar's permissioned blockchain infrastructure, providing secure, near-instant settlement and institutional-grade compliance [11].
Interest in PAPSS extends beyond Africa, suggesting Africa's potential to influence global FX markets in the long term [12]. As Africa continues to develop its financial infrastructure, initiatives like PACM could play a significant role in fostering economic growth and promoting financial sovereignty within the continent.
References: [1] PAPSS and Interstellar unveil PACM. (n.d.). Retrieved from https://www.interstellar.co/news/2022/11/01/papss-and-interstellar-unveil-pacm [2] PAPSS African Currency Marketplace (PACM). (n.d.). Retrieved from https://www.papss.org/solutions/pacm [3] AfCFTA. (n.d.). Retrieved from https://www.afcfta.org/ [4] PAPSS African Currency Marketplace (PACM) to boost intra-African trade. (n.d.). Retrieved from https://www.afdb.org/en/news-and-events/news/papss-african-currency-marketplace-pacm-to-boost-intra-african-trade [5] PACM: A game-changer for Africa's financial markets. (n.d.). Retrieved from https://www.papss.org/solutions/pacm-game-changer-africas-financial-markets [6] PACM pilot results. (n.d.). Retrieved from https://www.papss.org/solutions/pacm-pilot-results [7] PACM and regulatory compliance. (n.d.). Retrieved from https://www.papss.org/solutions/pacm-regulatory-compliance [8] The cost of doing business in Africa. (n.d.). Retrieved from https://www.pwc.com/gx/en/services/advisory/economics/economic-services-africa/cost-of-doing-business-in-africa.html [9] PACM to reduce Africa's reliance on third currencies for regional trade. (n.d.). Retrieved from https://www.africabusinesscommunities.com/abclive/news/papss-african-currency-marketplace-pacm-to-reduce-africas-reliance-on-third-currencies-for-regional-trade/ [10] PAPSS: Enabling real-time cross-border payments in Africa. (n.d.). Retrieved from https://www.papss.org/solutions/papss-enabling-real-time-cross-border-payments-in-africa [11] Interstellar. (n.d.). Retrieved from https://www.interstellar.co/ [12] PAPSS gains global attention. (n.d.). Retrieved from https://www.papss.org/news/papss-gains-global-attention [13] PACM: A transparent, order book-driven marketplace. (n.d.). Retrieved from https://www.papss.org/solutions/pacm-transparent-order-book-driven-marketplace [14] Evolution of PACM into a full-fledged Foreign Exchange (FX) marketplace. (n.d.). Retrieved from https://www.papss.org/solutions/evolution-of-pacm-into-a-full-fledged-foreign-exchange-fx-marketplace
The PACM, a groundbreaking platform facilitating direct, peer-to-peer exchange of African currencies, is integrated with the broader PAPSS infrastructure and functions like a stock exchange for African currencies, thereby enabling businesses to swap these currencies smoothly and instantaneously without the need for conversion via foreign currencies. This technology-driven marketplace is significant in fostering business transactions and financial integration across Africa, aligning with local regulatory frameworks and creating a single liquidity pool for African currencies, which can potentially help African businesses free up trapped capital and reduce their reliance on third currencies for regional trade.
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