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The Central Bank of Kenya recently put forth its stance on the necessity of a central bank digital currency (CBDC) in the country. In a statement released on Twitter, the bank suggested that the “pain points” in Kenya’s payment systems could be resolved via innovative solutions based on the existing infrastructure, thereby downplaying the need for a CBDC.
Earlier in February, the Central Bank had initiated a consultation process to gauge public opinion on the implementation of a CBDC. This process attracted over 100 responses from nine different countries, with participants ranging from commercial banks to other institutions.
The feedback received on the idea of a CBDC was mixed. While some respondents recognized the potential for increased efficiency, they also pointed out several risks, including significant implementation costs and the possibility of financial exclusion.
In its press release, the Central Bank of Kenya remarked, “The allure of the CBDC is fading”. Although the bank didn’t dismiss the idea of a CBDC completely, it declared that its focus would be on monitoring global CBDC developments to inform future assessments.
The bank also highlighted issues faced by countries that have already issued a CBDC. These issues have been a stumbling block in the implementation and adoption of the digital currency. Nigeria, for instance, has struggled with CBDC adoption, while the Central Bank of the Bahamas revealed plans to refine strategies to boost CBDC adoption, three years post its launch. The recent instability in the crypto market has only heightened these concerns.