The Central Bank of Kenya recently received feedback on a discussion paper regarding the potential issuance of a digital shilling. While the bank has not reached a definitive conclusion, it announced that it received over 100 comments from various stakeholders across nine countries. The responses highlighted both the potential benefits and risks of a central bank digital currency (CBDC). However, the bank stated that it will continue to monitor developments and adopt a measured approach to assess the rollout of a digital shilling in the future.
Public Feedback and Varied Perspectives:
In an announcement made on June 2 via Twitter, the Central Bank of Kenya revealed that it received feedback on the discussion paper from members of the public, commercial banks, tech firms, and other participants. The comments received varied in nature, with some emphasizing the potential advantages of a CBDC, while others raised concerns about associated risks. The bank acknowledged the diversity of opinions and expressed its commitment to carefully consider all perspectives.
Short to Medium Term Priorities:
Despite the interest in exploring a digital shilling, the central bank stated that implementing a CBDC may not be a compelling priority in the short to medium term. It acknowledged that existing pain points in the payment system could potentially be addressed by other innovative solutions within the current ecosystem. This cautious approach indicates that the bank is considering alternative measures to enhance the payment infrastructure before fully committing to a CBDC.
Collaboration and Global Trends:
The Central Bank of Kenya mentioned its collaboration with other central banks in developing proofs-of-concept for CBDCs. However, it also noted that the allure of CBDCs appears to be fading on the global stage. This observation implies that while the bank recognizes the potential of CBDCs, it is mindful of the evolving landscape and the need for a well-informed decision.
Kenya’s Growing Adoption of Crypto and Blockchain:
Kenya, as one of the largest economies in Africa, has witnessed significant growth in the adoption of cryptocurrencies and blockchain technology. Peer-to-peer platform Paxful has gained popularity among crypto enthusiasts in the country, and Bitcoin mining projects are providing power to rural communities. This increasing interest in crypto-related activities demonstrates Kenya’s openness to technological advancements and innovation.
The Central Bank of Kenya’s receipt of feedback on the discussion paper regarding the digital shilling reflects its commitment to engaging with stakeholders and considering various perspectives. While it has not made a conclusive decision on the issuance of a CBDC, the bank is taking a measured approach and prioritizing the resolution of existing payment system challenges. The collaboration with other central banks and the observation of global trends indicate that the bank is actively monitoring developments in the CBDC space. Kenya’s growing adoption of cryptocurrencies and blockchain technology further exemplifies its openness to embracing technological advancements.