The Central Bank of Kenya takes an ambivalent stance on the central bank digital currency (CBDC).
The central bank noted that the appeal of a CBDC is waning and issuing one “may not be a compelling priority.” With this statement, previous statements contradicted.
Kenya Central Bank Considers CBDCs Declining
The Central Bank of Kenya stated that the problems in the country’s payment systems can be solved with innovations structured around the existing ecosystem. A statement on Twitter said it received more than 100 comments on a consultation the central bank launched in February. Respondents included commercial banks and corporate representatives, and respondents highlighted the benefits of a CBDC, such as increased efficiency, while noting the risks of high implementation costs and financial exclusion.
The central bank cited “implementation-blocking” issues faced by CBDC issuing countries and the recent instability in the crypto market has raised concerns. For example, while Nigeria is having problems with adoption, the Bahamas central bank has announced that it is working on a strategy to improve CBDC adoption.
Last year, turbulence in the crypto market led to billions of dollars in value being wiped out during the so-called crypto winter. The Central Bank of Kenya stated in its press release that “CBDC’s attractiveness is diminishing” and stated that it will follow developments in CBDCs to inform future considerations.
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