The central bank in Kenya would like to stimulate a discussion about the introduction of a central bank digital currency (CBDC).
Financial inclusion is an important issue in many African countries. Local currencies are weak, inflation is high, and US dollars and other stable currencies are hard to come by. Many people are also dependent on getting money from relatives and friends abroad. While a central bank digital currency (CBDC) would not solve all problems in one fell swoop, it could at least be a start.
For example in Kenya. According to a press release , the Central Bank of Kenya (CBK) has published a discussion paper intended to test the applicability of a CBDC. This document outlines the possible variants of a digital Kenyan shilling, along with the feasibility and associated risks. The public is encouraged to put forward their suggestions for the plans.
Rapid technological innovations and developments accelerate the pace of digitization. New digital payment methods have emerged to facilitate transactions, including CBDC, which are issued by central banks and serve as money in digital form. Of course, the balance between risks and benefits of CBDCs will vary from one economy to another
, according to the press release.
Kenya ranks 5th in the Adoption Index
The consideration of public opinion comes after the bank's governor, Patrick Njoroge, reiterated the CBK's position last year that cryptocurrencies like bitcoin are not legal tender and are not regulated. As early as 2015, the bank had asked Kenyans to refrain from transactions with Bitcoin and other cryptocurrencies. However, given the problems mentioned at the beginning of the article, this is often not possible. Despite these difficulties, some countries in Africa have restricted or outright banned the sending of money to exchanges by local banks.
According to statistics from the blockchain analysis company Chainalysis, Kenya is currently ranked 5th in the Global Crypto Adoption Index 2021. Around 87 countries, which together account for over 90 percent of global GDP, are now in the trial phase of CBDCs, most notably China with the much-discussed E-Yuan, which is used, among other things, during the current Olympic Winter Games.
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