CBDC is not a priority, says the Central Bank of Kenya

The bank said Kenya’s payments problems could be solved by other measures besides launching a CBDC.

CBDC is not a priority, says the Central Bank of Kenya
The banking floor at the Central Bank’s headquarters in Nairobi | Credit: Cental Bank of Kenya

The Central Bank of Kenya (CBK) has made it known that it is in no race to roll out a central bank digital currency (CBDC) because it wants to ensure a safe and efficient payment system for Kenyans. Instead, the bank noted that the country’s payments problems could be solved by strengthening innovations around the existing payments ecosystem.

The details

  • In its Bank Supervision Annual Report for 2022, the CBK disclosed that its stance resulted from the responses it got following the release of a discussion paper on CBDC in February 2022.
  • According to the bank, most respondents believed the CBDC endeavor was fraught with risks.
  • While the CBK admitted that CBDCs could solve the inefficiencies around existing payments systems and impact cross-border payments, problems such as the availability of internet and smartphones could pose an expensive barrier to the widespread adoption of the currency.
  • In addition, the bank highlighted the need for public awareness and education on CBDCs and cryptocurrencies, especially on how they differ.
  • The bank further noted that the first CBDC rolled out in Africa — the eNaira — has witnessed a slow adoption rate and has done little to help financial inclusion, a significant problem the CBDC was touted to solve.
  • In defending its stance, the bank also pointed to other central banks, such as the Bank of Tanzania and the Bank of England, which have adopted a cautious position toward CBDCs.

Telling quote

  • The report stated:
“The rollout of CBDC should not be a race to be first. CBK’s vision is for a payments system that is secure, efficient, and widely available to and works for Kenyans. Presently, Kenya’s pain points in payments can potentially be solved by strengthening innovations around the existing payment ecosystem. Accordingly, implementation of a CBDC may not be a priority in Kenya in the short-medium term.”

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