The Central Bank of Kenya (CBK) has published a discussion paper on its central bank digital currency (CBDC), seeking public input on the potential benefits and risks and regulatory issues of introducing a CBDC in Kenya.
In a statement, the CBK has highlighted that using a CBDC might improve cross-border payments by making them more efficient and less expensive. The regulator says that CDBC solutions can flatten the multi-layered correspondent banking structure and shorten payment chains in a discussion paper exploring the future use of a digital currency:
“A key opportunity where CBK sees potential value is the use of CBDC in facilitating cross-border transactions, while it is difficult to quantify the benefits, CBDCs may have the potential to lead to efficiency gains by flattening the multi-layered correspondent banking structure and shortening the payment chains.”
The watchdog has given Kenyans until May 20 to submit their comments on the paper that examines the dangers and possibilities of CBDC, which has already been implemented in several nations worldwide, including Nigeria. The CBK will gather comments on the issue for 100 days through an online form.
Press release: Issuance of Discussion Paper on Central Bank Digital Currency (CBDC) for Public Comments. The Discussion Paper examines the applicability of a potential Central Bank Digital Currency (CBDC) in Kenya. pic.twitter.com/8vdcQNz7cG
— Central Bank of Kenya (@CBKKenya) February 10, 2022
CBDCs, according to CBK, may protect the public from the danger of new types of private money by providing safer and more trustworthy payment services than newly created forms of privately issued money, such as stablecoins. Nonetheless, it stated that CBDCs represent a risk for cyberattacks and various security issues, including data privacy concerns.
The Kenyan government has yet to decide whether to implement CBDC. The latest discussion paper is meant to jumpstart a debate and provide a foundation for further study.
Kenya has joined an exclusive cadre of nations that are either studying or have already started CBDC development. According to the Atlantic Council, as of June 2019, 91 countries are currently involved in sovereign digital currency research, with just 14 having advanced to the pilot stage. According to the information, nine nations have implemented a CBDC.
Related: Nigerian president to unveil eNaira central bank digital currency
China is currently the most advanced country operating a CBDC trial, dubbed the digital yuan, and the mobile application has already been downloaded over 20 million times since Jan. 4. As reported by Cointelegraph, Indian finance minister Nirmala Sitharaman revealed the launch of a digital rupee by 2022–23 to boost economic development.