The Central Bank of Kenya has published a discussion paper on the Central Bank Digital Currency inviting the public to comment on the issue.
The Discussion Paper outlines CBK’s development and potential applicability of a Central Bank digital currency and is inviting public participation in the potential adoption 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,” it said.
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According to the CBK, CBDC will prevent users from the emergence of new forms of private money through the provision of a secure digital currency.
CBK however said that the CBDC would also present an opportunity for cybercrime through cyber attacks.
“The ‘unknowns’ would impact central banks’ core functions of monetary policy, financial stability, and payment systems oversight,” CBK said.
CBDC would also exclude individuals who are unable to use technological gadgets because it is primarily dependent on technology infrastructure and technical literacy is not available to all members of the population, according to the report.
“There is potential for CBDC to enable the marginalized areas in the country to access a digital payments channel. This would require penetration of CBDC infrastructure in areas that have been marginalized by the private payment providers due to a lack of an adequate market.
Kenyans have until May 20 to submit their opinions on the document, which examines both the hazards and prospects of CBDC, which has already been implemented in a number of nations around the world, including Nigeria.
Below is the CBK letter:
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