Kenya’s Central Bank Questions the Urgency of CBDC Implementation

The Central Bank of Kenya’s Assessment of CBDC Implementation

The Central Bank of Kenya recently received feedback on a discussion paper addressing the possibility of introducing a digital shilling but has not reached a definitive conclusion.

In an announcement made on June 2 through their official Twitter account, Kenya’s central bank revealed that it had received over 100 comments from various stakeholders, including the public, commercial banks, and tech firms from nine different countries. These comments discussed the potential benefits and risks associated with the introduction of a central bank digital currency (CBDC). The central bank emphasized that it will closely monitor developments in this area and take a measured approach when considering the potential implementation of a digital shilling in the future.

The central bank stated, “In the short to medium term, implementing a CBDC in Kenya may not be a compelling priority. Importantly, Kenya’s existing payment ecosystem could potentially address the country’s payment challenges through other innovative solutions.”

This statement follows the release of a discussion paper by Kenya’s central bank in February 2022. The bank further mentioned that it has been collaborating with other central banks on proofs-of-concept for CBDCs. However, it noted that the global interest in CBDCs is diminishing.

As one of the largest economies in Africa in terms of gross domestic product (GDP), Kenya has experienced significant growth in the adoption of cryptocurrencies and blockchain technology in recent years. Crypto enthusiasts in the country widely utilize the peer-to-peer platform Paxful, and there are also Bitcoin mining projects aimed at providing electricity to rural communities.