‘Allure of CBDCs Is Fading’ Globally, Says Kenyan Central Bank

Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet

June 2, 2023 10:47 am

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After seeking feedback on CBDCs in February, Kenya’s Central Bank (CBK) has come out with a firm position, saying that in the current environment, “a CBDC in Kenya may not be a compelling priority in the short to medium term.”

On top of that, CBK argued that “on the global stage, the allure of CBDCs is fading.”

Notably, CBK didn’t completely shut down the idea of a digital Kenyan shelling, pledging to monitor CBDC developments around the world and work with other central banks that have issued their own digital currencies, according to a press release.

CBK issued a discussion paper in February going over some possible deployments of a CBDC and has now received over 100 responses from individuals, commercial banks, payment service providers and others.

Some of the benefits respondents highlighted included lower transaction costs, better foreign exchange rates and increased transparency.

One notable downside that the CBK mentioned was financial exclusion, which could very well happen if certain citizens don’t have access to the technology necessary to engage with the digital currency. A large majority of respondents, 87%, told CBK it was the job of the central bank to prevent that from happening.

Other risks CBK listed were disintermediation of banks, high implementation costs, and cyberattacks.

Additionally, CBK has witnessed some of the issues nations that have launched CBDCs have faced, so it has decided to take a wait and see approach.

“Central banks that were first to roll out CBDCs have recently faced challenges that have hampered implementation,” the central bank said in its statement. “Major global central banks have deferred the decision on the adoption of CBDCs. This measured approach is consistent with the approach that CBK is taking.”

So far, 11 countries — most of them Caribbean nations — have created CBDCs, according to the Atlantic Council’s CBDC tracker.

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