The Central Bank of Kenya (CBK) is open to the idea of a central bank digital currency (CBDC). Even so, considering the fading allure of CBDCs globally and the availability of alternative payment solutions in the East African nation, the central bank has, in a press release on June 2, said implementing a digitized version of the Kenyan Shilling is not their immediate priority.
Kenya: CBDCs Have Its Benefits But Is Not Our Priority
Kenya is open to using blockchain technology and has even explored the potential of a Central Bank Digital Currency (CBDC). In February 2022, the CBK asked for public input on implementing a CBDC in Kenya.
The paper, Discussion Paper on Central Bank Digital Currency, wanted to extract views from the public which could then be used to inform policy and the degree of public acceptance of the innovation.
After 16 months, the CBK reported that feedback highlighted the benefits the CBDC could offer. These include reduced transaction costs, increased transparency, and improved efficiency.
However, while there were positives, the CBDC in Kenya would likely cause the disintermediation of banks, lead to financial exclusion, and there were high implementation costs.
Besides, there were risks of cyber-attacks on the issuing entity, considering the CBDC will exist digitally and be issued via a public or private network. CBDCs differ from privately issued crypto assets like Bitcoin or Ethereum.
Author: Dalmas Ngetich
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