- The level of acceptance among the public will be extremely low
- The Central Bank proposes a study on the real demand for cryptocurrencies
- After that, the regulator and government promise to consult on a regulatory framework for the industry
The Kenyan Central Bank last week released a report on the CBDC study, which began in 2022.
In it, the regulator says it sees no reason to integrate the digital currency in the short to medium term.
The central bank has studied the two main positive economic impacts of CBDC – financial affordability and reduced costs of cross-border transfers.
Regulator Governor Patrick Njoroge has previously stated that the digital currency will not be a panacea.
Yes, the availability of electronic money in the country has increased over the years (from 26% in 2006 to 83% in 2022). But this is primarily the merit of mobile operators.
This includes the M-Pesa system from Vodafone and Safaricom. At the same time, the Central Bank’s digital currency is unlikely to find application at the micro level.
Less than a third of Kenya’s population uses smartphones, not to mention e-wallets.
By integrating CBDC comes with many risks. First and foremost, it is illegal financial flows and cybercrime.
Instead, the Central Bank is calling for a comprehensive study of the level of acceptance of crypto-assets in the country.
Unlike CBDCs, private tokens do not require huge implementation costs, while remaining a more reliable option, at least in the short term.
The regulator and government will consult on the findings to develop a possible regulatory framework for the sector. But exactly when this will happen is unknown.
It is interesting that earlier the authorities in Kenya announced plans to impose a 3% tax on transactions of cryptocurrency and NFT.
And this despite the fact that the country does not even have a legal definition of digital assets. Human rights activists were outraged by this decision.