The Central Bank of Kenya (CBK) says that it does not see the immediate implementation of a CBDC in Kenya as ‘a compelling priority in the short to medium term.’
In a press release, the CBK said this position comes after a comprehensive analysis of public feedback and taking into account global development.
The Central Bank of Kenya 🇰🇪 says a Kenyan CBDC is not a priority
Here's why:
1.) Kenya boasts a highly developed digital payments ecosystem and the CBK acknowledges that existing innovative solutions can continue to address the country’s pain points in payments.
2.)… pic.twitter.com/Nzk9VWdSAv
— BitKE (@BitcoinKE) June 2, 2023
In February 2022 the bank invited the public to give feedback on the potential advantages, disadvantages, and policy implications of a Central Bank Digital Currency (CBDC) in Kenya.
More than 100 responses were received from a wide array of stakeholders, including individuals, public organizations, commercial banks, Payment Service Providers (PSPs), technology companies, educational institutions, legal professionals, and international development partners.
As per the CBK’s findings, participants emphasized the significant importance of taking into account Kenya’s advanced digital payment infrastructure and the extensive financial inclusion. They also underscored the need for a thorough evaluation of the potential risks linked to a CBDC, especially in light of the recent volatility observed in the global cryptocurrency market.
The CBK also recognized the active exploration and implementation of CBDC initiatives by organizations such as the Bank for International Settlements (BIS), the International Monetary Fund (IMF), and various central banks worldwide.
However, CBK acknowledged that the global interest in CBDCs has waned. Early adopters of CBDCs have encountered difficulties during the implementation process, prompting major central banks around the world to approach the matter with caution.
Kenya has a well developed financial system anchored by mobile money, digital platforms, and traditional banking which have contributed in lifting financial inclusion, from 26.7% 10 years ago to 83% currently.
According to the CBK, the existing innovative solutions are capable of addressing the payment-related challenges in the country. The CBK acknowledges that while a CBDC could potentially provide advantages in cross-border transactions, it is crucial to conduct a thorough assessment of the risks involved before considering its implementation.
Nigeria remains the only African country to have launched a CBDC to date.
Here is a recap from the CBK statement:
- Kenya boasts a highly developed digital payments ecosystem and the CBK acknowledges that existing innovative solutions can continue to address the country’s pain points in payments
- The allure of CBDCs is fading on the global stage. Central banks that were early adopters of CBDCs have faced challenges in implementation, leading to a cautious approach among major global central banks
- CBK Emphasizes the importance of carefully assessing the risks associated with a CBDC, particularly in light of recent instability in the global crypto assets market.
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