The Central Bank of Tanzania has said that it is adopting a phased and calculated approach to adopting Central Bank Digital Currency (CBDC).
This was contained in a statement issued on research conducted on the proposal by the Directorate of Financial Deepening and Inclusion, Bank of Tanzania.
A major consideration in this research was the issue of the risks and controls associated with the issuance, distribution, counterfeiting, and usage of currencies.
“the Bank of Tanzania has adopted a phased, cautious, and risk-based approach to the adoption of CBDC. The Bank of Tanzania will continue to monitor, research, and collaborate with stakeholders, including other central banks, in the efforts to arrive at suitable and appropriate use and technology for the issuance of Tanzanian shillings in digital form.
“The key considerations during this research stage involve choosing a suitable approach to CBDC adoption based on the Tanzania context. This includes type of CBDC to be issued (wholesale, retail or both), models for issuance and management (direct, indirect, or hybrid), form of CBDC (token-based or account-based), instrument design (remunerated or non-remunerated) and degree of anonymity or traceability.
“Upon conclusion of research phase, the Bank will provide information to the general public on the way forward, which may include a roadmap for transition to adoption of CBDC. “the bank said.
The research further said that more than 100 countries in the world are at different stages of the CBDC adoption journey with 88 at research, 20 proof of concept, 13 pilot, and 3 at launch.
“Analysis of these findings indicate that majority of central bankers across the world have taken a cautionary approach in the CBDC implementation roadmap, in order to avoid any potential risks that can disrupt financial stability of their economies.
“Further, it was observed that, 6 countries have canceled their CBDC adoption mainly due to structural and technological challenges in the
implementation phase. The structural challenges include the dominance of cash in making transactions and the existence of inefficient payment systems, high implementation costs, and the risk of disrupting the existing ecosystem. ”
Central Bank Digital Currency (CBDCs) has grown in popularity across Africa.
Nigeria’s Apex bank, the Central Bank of Nigeria (CBN) took the lead by introducing the first-ever CBDC in Africa, the eNaira.
Although experts say that the initiative failed to meet up with the objectives outlined by the CBN, dozens of African countries have followed the CBN’s footsteps in the creation of digital currencies.
