Accelerating De-dollarization! Congo: Ban on US Dollar Cash Transactions Starting Next April

The Democratic Republic of Congo announced that starting next April, it will restrict US dollar cash transactions, marking a key step for this highly dollarized African economy toward de-dollarization. Andre Wameso, Governor of the Central Bank of the Congo, announced the plan during the International Monetary Fund and World Bank Spring Meetings in Washington, stating the move aims to combat money laundering and boost confidence in the domestic currency. US dollar bank accounts will be retained, but related payments will shift to electronic channels, with a one-year transition period and possible amnesty arrangements to encourage cash deposits into the banking system. The backdrop for this policy is the strong performance of the Congolese franc in recent years—appreciating nearly 30% against the US dollar throughout 2025. However, Alexander Venter, an economist at Oxford Economics, noted that given the informal, cash-based nature of the Congolese economy and weak public confidence in the local currency, "the implementation risk is high." Policy Framework: Electronic Replacement for Cash The degree of dollarization in the Congolese economy ranks among the highest globally. IMF data shows that approximately 90% of bank deposits and over 97% of loans in the country are denominated in US dollars, rooted in historical trauma left by hyperinflation in the 1990s. Wameso stated that commercial banks receive billions of dollars in cash annually, yet only a small fraction remains on their books. "This means the imported dollars do not stay within the formal economic system," he said. "Much of these funds may flow to neighboring countries where dollars are scarce, creating serious issues regarding fund traceability." Under the plan, cash US dollar transactions will be restricted, but US dollar bank accounts themselves will remain unaffected. Payment channels will be mandated to shift to electronic methods, while authorities have designed a one-year transition period and may introduce an amnesty mechanism to encourage the public to deposit their held US dollar cash into banks. To support this transition, the Central Bank of the Congo has approved a batch of fintech companies to enter the market and established partnerships with Visa Inc. and Mastercard Inc. to expand payment coverage. Last week, the central bank also issued a six-month treasury bond; the first auction sold 100 billion Congolese francs worth of bonds, with three-quarters successfully placed, aiming to support the local currency exchange rate. "This tells us that economic agents expect stability to continue," Wameso said. Anti-Money Laundering Pressures and Regional De-dollarization Trends This policy adjustment is also driven by pressure from international regulators. Congo currently remains on the Financial Action Task Force (FATF) "grey list"—which currently covers over 20 countries. Being listed can damage sovereign credit ratings and jeopardize the ability to integrate into the global banking network. Wameso stated that the relevant measures aim to strengthen regulation, expand banking system coverage, and bring Congo up to international anti-money laundering standards, pushing to remove its "grey list" status. From a regional perspective, Congo's move is not an isolated case. In recent years, African countries such as Tanzania and Zambia have successively strengthened controls on US dollar usage, requiring domestic transactions to be settled in local currencies. Congo's entry into this trend reflects the continent-wide movement toward monetary sovereignty. The continued strength of the Congolese franc provides important support for the above reforms. Earlier this month, the Congolese government completed its first euro-denominated bond issuance, raising $1.25 billion—with a coupon rate of 8.75% for five-year bonds and 9.5% for ten-year bonds. This issuance succeeded despite dual challenges: rising oil prices due to conflict in the Middle East and ongoing rebellion in eastern provinces. "If the market is willing to purchase Congo's ten-year bonds, it means the market is betting on peace," Wameso said. Over the weekend, the Congolese government reached an agreement with the M23 armed group, supported by Rwanda, to advance the peace process, including prisoner exchanges. The Congolese economy relies heavily on mining, particularly copper. Gold Reserve Plan Moves to Agenda Wameso also revealed that the central bank is actively advancing a plan to replenish gold reserves using domestic output to enhance foreign exchange buffer capacity. The central bank is collaborating with the state-owned enterprise DRC Gold Trading SA to identify ethically sourced artisanal gold and is evaluating certified refiners in Switzerland, the UAE, and Singapore. Additionally, he stated that the central bank revised equity structure requirements for banks last year—previously requiring four shareholders each holding at least 15%, now changed to determine the number of shareholders, shareholding ratios, and exemption arrangements on a case-by-case basis.