The Central Bank of Kenya (CBK) says rolling out a Central Bank Digital Currency (CBDC) in the country is not a compelling priority.
“The allure of the CBDC is fading,” the Central Bank of Kenya said in its Discussion Paper on Central Bank Digital Currency. “The bank will continue to monitor developments in CBDCs to inform future assessments.”
The regulator invited views from the public on the potential introduction of a central bank digital currency (CBDC) in February 2020.
The CBK received more than 100 comments, some from nine countries and including representatives from commercial banks and institutions.
It further disclosed that major global central banks have been cautious in adopting CBDCs due to the challenges faced by early adopters in implementation.
Nigeria became the first country in Africa to launch a CBDC on October 25, 2021, and the second to run a CBDC after the Bahamas.
“Central banks that were first to roll out Central Bank Digital Currencies (CBDCs) have recently faced challenges that have hampered implementation.
Further, recent instability in the global crypto asset market has amplified concerns and highlighted the need to review innovation and technology risks carefully.
Ongoing Research
The CBK also acknowledged the ongoing research and implementation of CBDC projects by the Bank for International Settlements (BIS), the International Monetary Fund (IMF), and other central banks worldwide.
“Major global central banks have deferred the decision on adopting CBDCs. This measured approach is consistent with the approach that CBK is taking.
“CBK has also been collaborating with other central banks that have developed a proof of concepts for CBDCs, to benefit from their experience,” CBK explained.
The latest study, “The African Digital Banking Transformation Report 2023”, by the African Banker magazine in collaboration with engagement banking platform Backbase, shows that Kenya, Uganda, Tanzania, Rwanda, Madagascar, Zimbabwe, Eswatini, Namibia, and Zambia are still conducting research on the operations of a CBDC, while South Africa and Ghana are piloting the concept.
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