Sun. Jun 23rd, 2024

Central Bank of Kenya Plans Central Bank Digital Currency

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The Central Bank of Kenya on Thursday released a communication titled a “Discussion Paper on Central Bank Digital Currency” soliciting for public and expert contributions on the Bank’s plan to introduce central bank digital currency CBDC.

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The public are expected to share it’s views with the bank from now till May 20th on the possibility of adopting CBDC.

It acknowledged the risks of such a move, including financial exclusion for those without access to technological infrastructure or knowledge and outflows from commercial banks, while pointing to benefits, including reducing cross-border payment costs.

“Looking to the horizon, it will be critical to connect our payment systems across the region and globally. Existing proposals indicate that CBDC might hold the potential to achieve this interoperability,” said the CBK.

For that to happen, all countries in the region would need to participate in order to flatten “the multi-layered correspondent banking structure” and shorten the payment chains, the bank said in a statement.

“The balance of risks and benefits of central bank digital currency will vary from one economy to another,” it said.

Nigeria became the first country in Africa to launch its central bank digital currency (CBDC), dubbed the eNaira, in October last year while Ghana is said to be at an advanced stage of launching its e-cedi. The Bank of Zambia is also carrying out research on digital currencies. The CBDCs, unlike cryptocurrencies like Bitcoin and Ethereum, are developed by central banks and pegged on countries’ fiat currencies

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