By Alicia Maher
It’s no news that global interests in CBDC since China first made public knowledge in 2014 has skyrocketed tremendously, with many countries rolling out plans to introduce it. Kenya, a country in Eastern Africa, has joined the long list of countries exploring the options of adopting a CBDC.
Unlike many countries that seek counsel from the people in government and bank regulators only, Kenya is seeking opinion from the public on the proposed introduction of its digitized currency. Presently, the nation is weighing the cons and pros of entering into the CBDC sphere, and seeking public opinion will influence their stance on adoption.
Kenya’s Apex Bank Weighs the Risks and Merits of Digitized Currency
Kenya, one of the first nations in Africa to kickstart mobile money payment, is meticulous about launching a CBDC even though there are benefits attached to it. According to CBK, the risks and benefits of digitized currency vary from country to country.
The top financial regulator recognized some of the advantages of CBDC, including facilitating cross-border payments at a significantly lower cost and onboarding the unbanked and underbanked, especially those with limited knowledge of what banking means.
If CBDC is eventually rolled out in all the countries, it will drive the inclusion of over 1.7 billion people. This outlines the numerical advantage of CBDC over the traditional banking system. However, Kenya isn’t ready to pull the plug yet, given the risks.
According to Kenya’s Apex Bank, rolling out a CBDC will negatively hamper monetary policies by paving the way for financial crimes like money laundering and fraud to cripple traditional banks. However, the bank suggested a solution for a CBDC to operate efficiently – seeking regional cooperation. CBK explained that it could limit the payment cycle by removing the multi-banking protocols.
Japanese Central Bank shared similar sentiments. The BOJ opined that global cooperation involving the United States of America and Europe is critical to the performance of CBDC.
Countries Are Rolling Out their CBDCs
While Kenya is still contemplating the possibilities of rolling out a CBDC, many other countries have begun testing their CBDCs. Recently, Tanzania is leading the pace in Eastern Africa, with the rollout in high gear.
After postponing the initial launch on Independence day, Nigeria finally got the ball rolling a few weeks later with the launch of the eNaira. China was the first country to roll out a CBDC digital Yuan (eCNY) after years of testing and exploration.
Europe is also making plans to launch its digital Euro (eEuro). First, it would have to investigate the potential risks and benefits of adopting it. CBDCs are pegged to real assets and controlled by the central bank operating within that jurisdiction, unlike cryptocurrencies.
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