Kenya Central Bank Takes Ambivalent Stance on Digital Currency
According to the Central Bank of Kenya, the interest in a central bank digital currency (CBDC) is diminishing, and the issuance of one may not be a pressing priority. The bank suggests that the challenges in the country’s payment systems can be addressed through innovative solutions built around the existing ecosystem.
In a Twitter statement released on Friday, the central bank revealed that it had received feedback from over 100 respondents representing commercial banks and institutions across nine countries. These respondents emphasized the benefits of a CBDC, such as improved efficiency, but also pointed out potential risks, including high implementation costs and the potential for financial exclusion.
The central bank further highlighted that countries that have already introduced a CBDC have encountered obstacles that hindered its successful implementation. Additionally, concerns have been amplified by recent market instability in the cryptocurrency sector. For instance, Nigeria faced challenges with adoption, and the Bahamas central bank announced plans in May to enhance CBDC adoption, three years after its initial launch.
The crypto market experienced significant losses during the so-called crypto winter last year, and the collapse of stablecoin issuer Terra and crypto exchange FTX further contributed to market turbulence.
“The appeal of the CBDC is diminishing,” stated the Central Bank of Kenya in its press release. The bank added that it will continue to monitor CBDC developments to inform future evaluations.
