After highlighting Central Bank Digital Currency (CBDC) merits, the Central Bank of Kenya (CBK) said that a CBDC could impact the local financial system positively. The CBK then went ahead and issued a discussion paper for the general public to express their views on the matter.
The public has until 20th May 2022 to give their feedback.
According to CBK, launching CBDCs could flatten the multi-layered correspondent banking structure and enhance cross-border payments that will be less costly and more efficient. They said:
‘’CBDC could potentially shield society from the risk of new forms of private money by providing safer and more trustworthy payment services than new forms of privately issued money-like instruments, such as stablecoins.”
However, the institution did not address the issue of cyberattacks that could be presented on the financial product.
Growing adoption of CBDCs around the globe
Kenya has joined other countries like South Korea, India, Malaysia, and China which are actively exploring CBDCs. Another African nation, Zambia, announced earlier this week that it will complete its research on CBDC end of 2021.
Director of the International Monetary Fund (IMF), Kristalina Georgieva, claimed that CBDCs could be a safer monetary product than cryptocurrencies since they can be controlled by the government or institution. She termed Bitcoin and the altcoins as volatile and “unbacked’’
CBK had previously expressed feelings towards BTC but later blamed the IMF’s controversial policies for the Shilling’s weakening towards the end of 2020.
According to Central Bank Governor, Patrick Njoroge, adopting the primary cryptocurrency could fix some of the local financial turmoil and shield Kenya from Forex exchange losses.
“Our decision to shift to Bitcoin is both tactical and logical. Our currency has always been the punching bag for the IMF, which always claims that the Kenya Shilling is overvalued. This has led to too much pressure on the Kenyan Shilling, and this has a negative effect on the economy. We are losing too much simply because someone at the IMF woke up on the wrong side of the bed. Bitcoin will put an end to this.”