The Central Bank of Kenya (CBK) has announced that the rollout of a Central Bank Digital Currency (CBDC) is not currently a top priority. The allure of the CBDC seems to be fading, according to the CBK’s Discussion Paper on Central Bank Digital Currency, and the bank will continue to closely observe the progress and advancements in CBDCs to make informed decisions in the future.
The CBK had sought the public’s opinion on the potential implementation of a CBDC back in February 2020. Over 100 comments were received, including feedback from nine countries and representatives from commercial banks and institutions. Interestingly, the CBK has discovered that numerous global central banks have displayed caution in adopting CBDCs due to the challenges encountered by early adopters during implementation.
Nigeria holds the distinction of being the first African country to launch a CBDC on October 25, 2021, followed by the Bahamas. However, central banks that were pioneers in introducing CBDCs have recently faced obstacles that have hindered smooth implementation. Additionally, the recent instability in the global crypto asset market has raised concerns and emphasized the need for a meticulous assessment of innovation and technology risks.
The CBK recognizes the ongoing research and implementation efforts of CBDC projects by various organizations such as the Bank for International Settlements (BIS), the International Monetary Fund (IMF), and other central banks worldwide. Many major global central banks have deferred their decisions on adopting CBDCs, adopting a cautious and measured approach, which aligns with the CBK’s current stance. Moreover, the CBK has been collaborating with other central banks that have developed proof of concepts for CBDCs, aiming to learn from their experiences and insights.
According to “The African Digital Banking Transformation Report 2023,” a study conducted by the African Banker magazine in collaboration with the engagement banking platform Backbase, several countries, including Kenya, Uganda, Tanzania, Rwanda, Madagascar, Zimbabwe, Eswatini, Namibia, and Zambia, are still in the research phase regarding CBDC operations. On the other hand, South Africa and Ghana have started piloting the concept of CBDCs, showcasing their commitment to exploring the potential of digital currencies.
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