A revolution in technology has been pushing for countries, globally to relook into their currency advancement, over the adoption of the Central Bank Digital Currency (CBDC), but Kenya thinks otherwise.
According to the Central Bank of Kenya (CBK), recent instability in the global crypto assets market has amplified concerns and the need for a careful review of the innovation and technology risks.
The remarks follow a discussion paper which has been before the public for review since February last year.
“Implementation of a CBDC in Kenya may not be a compelling priority in the short to medium term,” said CBK in a statement.
The results of the paper were tabled on June 2, 2023, which showed different views from over 100 responses from a diverse range of individuals, public institutions, commercial banks, Payment Service Providers (PSPs), technology providers, academia, the legal fraternity, and international development partners.
The institutions, championed by commercial banks expressed security risks among the major concerns upon the rollout of the CBDC.
“Respondents identified disintermediation of banks, high implementation costs, technology and cyber risks, and financial exclusion among key risks,” said the CBK.
The responses were from across nine countries including Kenya, South Africa, the United States of America, the United Kingdom, the Netherlands, Germany, Switzerland, Sweden, and Japan.
They, however, highlighted increased efficiency, transparency, and lower costs as the main potential benefits of CBDC.
Central banks that were first to roll out CBDCs have recently faced challenges that have hampered implementation.
Kenya’s pain points in payments could potentially continue to be addressed by other innovative solutions around the existing ecosystem – said the CBK.
This would be consistent with the regulator’s vision for a payments system that is secure, fast, efficient, accessible to and works for Kenyans.
CBK said it will continue to “monitor developments in CBDCs to inform future assessments of the need for CBDC in Kenya.”
