In a recent announcement, the Central Bank of Kenya (CBK) has indicated that the allure of central bank digital currencies (CBDC) is fading, and the implementation of such currencies may not be a priority in Kenya in the short to medium term. The CBK’s statement comes as a follow-up to its earlier discussion paper on CBDCs, where it assessed the potential benefits and risks associated with introducing a CBDC to the Kenyan economy.
The CBK’s initial assessment, published in February 2022, raised concerns about the potential threat to Kenya’s financial stability that a CBDC could pose. Despite this, the central bank expressed a desire to gather public opinions and better understand the views of Kenyan residents on the matter.
In its latest document titled “Discussion Paper on Central Bank Digital Currency: Comments from the Public,” the CBK reiterated its belief that the advantages of a CBDC might not be as significant as previously anticipated. The bank emphasized that existing payment innovations already provide some of the touted benefits of a CBDC.
The CBK highlighted that its primary vision is to create a secure, efficient, and widely available payments system that truly works for the people of Kenya. It stressed that the rollout of a CBDC should not be driven by the race to be the first, but rather by a comprehensive evaluation of the country’s payment ecosystem and addressing the existing pain points in the system.
While the CBK acknowledged that it will continue to monitor global developments regarding CBDCs, it also disclosed that it is actively collaborating with central banks that have already issued CBDCs to assess whether the expected benefits have been realized. The CBK further mentioned that the comments received from the public have played an influential role in both internal and external consultations with other central banks.
As the CBK’s stance on CBDCs evolves, it is clear that the central bank is committed to ensuring the stability and efficiency of Kenya’s payment system. The focus is now on leveraging existing innovations to address the challenges in the country’s payment ecosystem rather than rushing into the adoption of a CBDC. By closely observing the experiences of other central banks and engaging with the public, the CBK aims to make informed decisions regarding the potential implementation of a CBDC in the future.
Source: https://azcoinnews.com/central-bank-of-kenya-takes-cautious-stance-on-central-bank-digital-currencies.html
