The National Bank of Rwanda has released a questionnaire seeking views from the public about a Central Bank Digital Currency (CBDC).
“The National Bank of Rwanda (BNR) is considering introducing a Central Bank Digital Currency (CBDC) to modernize the financial sector. Extensive research has led to a detailed feasibility study, forming the basis of our approach. Your opinions are valued and can influence the future of CBDC in Rwanda.
Kindly fill in the questionnaire on this link.”
According to Marvin Karenzi, an Analyst in the Payments Department of the National Bank of Rwanda, a feasibility study was initiated in September 2022 and examined the potential benefits, risks, and practicalities of implementing a retail CBDC in Rwanda.
The analysis covered economic, functional, legal, and financial aspects, identifying key challenges in Rwanda’s financial Sector and payment systems. This study also assesses possible opportunities for a CBDC and other alternatives, laying a solid foundation for Rwanda’s future digital financial landscape.
Based on the study, the 4 opportunities that have been earmarked for the solution by a CBDC include:
- Enhancing resilience by offering capability to conduct secure consecutive offline payments
- Stimulating innovation and competition within the financial sector
- Supporting the national cashless economy initiative
- Improving the efficiency and transparency of cross-border remittances
Nonetheless, the bank is wary if the CBDC would be adopted by the public, financial service providers and merchants. According to Claudine Kwizera. Senior legal Officer, National Bank of Rwanda (BNR), this warrants the need for deep user research on how users would treat an offering of a CBDC and will therefore be carefully investigated prior to decision-making.
“CBDC should be clearly articulated and explained to people in a simple manner (even now, many adults in Rwanda have felt or experienced a lack of transparency from financial service providers, including lack of clear information on financial products and services).”
Hence, the Central Bank intends to adopt a careful and gradual strategy for potentially introducing a Central Bank Digital Currency (CBDC). This strategy will involve conducting Proof of Concept (PoC) stages and pilot programs, each with well-defined schedules.
The PoC phase will allow the NBR to experiment with a CBDC within a controlled, limited setting, aiming to gain understanding of the technology and explore potential applications.
“This would strategically position the BNR in a favorable condition in terms of readiness to determine how to go forward with CBDC in the future.”
This process could also lead to identifying more opportunities and possibilities feeding back into the decision-making process as the BNR moves forward. This will also align the BNR with other central banks actively exploring CBDC in Africa and other regions of the world, so that it could engage with them at joint CBDC projects, for instance in experimenting cross border CBDC transactions.
9 Out of 13 African Countries Chasing CBDCs Are in Research Phase, Says The IMF
African countries researching CBDCs are:
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