Kenya on Route to CBDC Discussions
Kenya has become the latest nation to on the bring of CBDC development, a phenomenon that has taken the financial world by storm, and has reached a point where lack of participation may lead to an exclusion of potential future benefits. The Central Bank of Kenya pushed a paper on central bank digital currencies (CBDC) that highlight the project's major pros and cons.
The bank commented on some of the positive sides of digital currencies – an increase in financial stability, room for innovation, the expansion of cross-border payments, – but it was not short on the disadvantages. CBDC's, according to the Kenyan bank, have to be fully considered, including technological risks, unforeseeable costs of infrastructure, as well as “undermining bank intermediation, hampering monetary policy transmission, Anti-Money Laundering and Combating the Financing of Terrorism”, etc. It seems that the cons outweigh the pros.
Currently, the Central Bank of Kenya is keeping an eye on the ongoing CBDC situation around the world, taking notes. The bank has accepted the increasingly important role that digital currencies play on a global scale. It asserted that the pandemic resulted in an outflow of crypto platforms that have since then become important institutions. A CBDC is the natural consequence of this, the bank commented.
Some 86% of global central banks are exploring CBDC possibilities (take form a survey by the Bank for International Settlements ), while many are already testing their pilot programs.