Central Bank Of Kenya Opens Up For Public Input On Possible CBDC

The Central Bank of Kenya (CBK) has published a discussion paper on its central bank digital currency (CBDC), looking for public input on the possible benefits, risks, and regulatory issues of introducing a CBDC in Kenya.

In an official statement, the CBK has highlighted that the use of a CBDC may enhance cross-border payments by making them much more efficient and less expensive. The regulator stated that CBDC solutions may flatten the multi-layered correspondent banking network and then shorten the payment chains in a discussion paper that explores the future use of a digital currency.

The announcement reads:

“A key opportunity where CBK sees potential value is the use of CBDC in facilitating cross-border transactions, while it is difficult to quantify the benefits, CBDCs may have the potential to lead to efficiency gains by flattening the multi-layered correspondent banking structure and shortening the payment chains.”

The regulating body has given Kenyans until May 20 to submit their comments on the paper that reviews the dangers and benefits of CBDC that has already been implemented in many countries around the world. Nigeria is among the countries that are already testing CBDCs. The Central Bank of Kenya will gather comments on the issue for up to 100 days via an online form.

Press release: Issuance of Discussion Paper on Central Bank Digital Currency (CBDC) for Public Comments. The Discussion Paper examines the applicability of a potential Central Bank Digital Currency (CBDC) in Kenya. pic.twitter.com/8vdcQNz7cG

— Central Bank of Kenya (@CBKKenya) February 10, 2022

According to the CBK, CBDCs might protect the public from the danger of new types of private money by offering safer and highly trustworthy payment services than newly developed forms of privately issued money, like stablecoins. Nevertheless, it said that CBDCs represent a major risk for cyberattacks and different security issues, including data privacy worries.

Government Of Kenya Considers CBDC

The government of Kenya is yet to decide whether it will implement a CBDC in the near term. The latest discussion paper is meant to kick-start a debate and offer a foundation for more studies. Kenya has now joined an exclusive cadre of nations that are either studying or have already begun CBDC development.

As of June 2019, according to the Atlantic Council, 91 countries are now involved in the sovereign digital currency research, with 14 having advanced to the pilot stage. Based on the information, nine nations have implemented a CBDC.

Today, China is the most advanced nation operating a CBDC trial, dubbed the digital yuan and the mobile application has already been downloaded more than 20 million times since January 4. Based on previous reports, Indian finance minister Nirmala Sitharaman revealed the launch of a digital rupee by 2022–23 to enhance economic development.