Smart Contract-Driven FX Compliance: A Hyperledger Fabric Framework for Real-Time Monetary Policy Enforcement in Zambia

Abstract

Inefficiencies in Zambia’s foreign exchange (FX) ecosystem—marked by fragmented oversight, volatility, and weak enforcement—limit the effectiveness of monetary policy. This paper proposes a blockchain-based framework using Hyperledger Fabric to deliver a secure, permissioned, and tamper-resistant FX management system. Unlike existing blockchain compliance trials and Central Bank Digital Currency (CBDC) pilots such as Nigeria’s eNaira or South Africa’s Project Khokhar, the framework is uniquely tailored for real-time, cross-institution FX compliance in developing economies. Developed through the Design Science Research Methodology (DSRM), the prototype integrates smart contracts, peer nodes, certificate authorities, and compliance logic. Smart contracts automatically enforce daily FX transaction limits, flagging or rejecting violations based on client identity. The architecture employs chaincode for programmable enforcement, an immutable ledger for auditability, and the Raft protocol for efficient ordering. The study is guided by three questions: (i) how smart contracts can enforce real-time compliance; (ii) what performance thresholds for latency, throughput, and compliance accuracy are achievable; and (iii) what scalability challenges emerge for national deployment. A Docker-based testbed achieved block confirmation times under two seconds, compliance accuracy above 97%, and throughput of up to 50 transactions per second beyond technical feasibility, the study highlights adoption barriers—regulatory buy-in, governance, integration costs, and infrastructural constraints— while affirming blockchain’s potential to enhance transparency, stabilize currency markets, and strengthen monetary policy in Zambia and Sub-Saharan Africa.