The Central Bank of Kenya (CBK) is in discussions with other central banks globally regarding the introduction of a central bank digital currency. The regulator is also exploring digital currency regulations, recognizing the high adoption in the East African country.
CBK governor Dr. Patrick Njoroge made the revelations on the sidelines of the DC Fintech Week 2020, local outlet Kenyan Wall Street reports. Njoroge stated that the regulator is cautiously optimistic regarding digital currencies and central bank digital currencies.
In his presentation during the event, Njoroge revealed that the CBK has been marginally involved in some of the global CBDC initiatives.
He stated, “We are already having discussions with other global players, in various ways, around the introduction of Central Bank Digital Currencies. The push comes as a result of mushrooming of private cryptocurrencies and we [central bankers] are already feeling left out and need to create our own space.”
The bank is looking at how a CBDC can help it to achieve its mandates which include stabilizing the Kenyan economy. Njoroge insisted that for the central bank, maintaining the stability of the East African country’s economy takes priority.
“We will look at it [a CBDC] and see whether there is potential for enabling us to do our work better,” he stated.
A CBDC will play a big role in the progress towards the reduced use of cash for payments, the central banker believes. While the use of cash has reduced significantly in Kenya, Njoroge claimed that it will take a long time before Kenya becomes a cashless economy.
“It’s not that we are going to a cashless economy, I think we are going to ‘less cash’ economy.”
On digital currencies, the governor believes that they have a place in Kenya’s economy. However, they must be clearly regulated to address concerns such as money laundering.
“The space for cryptocurrencies needs to be well mapped out so as to address the potential negative side effects such as money laundering and financing of illicit activities.”
The governor’s stance on a CBDC and the potential of digital currencies signals the strides Kenya’s central bank has taken in recent times. In the past, the bank has issued stern warnings against trading of digital currencies, citing their ‘risky’ nature. However, this has done little to stop Kenyans from adopting digital currencies.
As CoinGeek reported, Kenya ranked first in Africa and fifth globally in the Chainalysis Global Crypto Adoption Index.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
See also: Centbee’s presentation at CoinGeek Live.
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