The Central Bank of Kenya Introduces Another Currency In Kenya.
The Central Bank of Kenya (CBK),has released a well-thought-out discussion paper detailing why it is important to officially launch digital currencies in Kenya.
In the document released on Thursday, February 10, CBK has explained in detail how the new Central Bank Digital Currency (CBDC) will be applied once it is rolled out in the country.
A digital currency, according to CBK, is a means of payment that exists purely in electronic form and can be exchanged for a pre-determined amount equivalent to the local fiat currency.
“Rapid technological innovations and developments are accelerating the pace of digitisation. New digital payment methods have emerged to facilitate transactions, including CBDC, issues by the central banks to serve as money in a digital form,” part of their statement read.
“CBK has been closely monitoring these developments globally. Accordingly, CBK has prepared the Discussion paper that outlines the evolution of payments globally and in Kenya and discusses recent digital payment methods including electronic money, CBDC, stable coins, and other cryptocurrencies.”
To comprehensively evaluate if the digital currency can be applied in Kenya, CBK has invited the public to submit their views in compliance with the constitution which demands that public participation must be part of the process.
CBK noted that the decision to initiate plans to introduce a new digital currency has been informed by the shift in modes of transactions globally where many countries are transitioning to using digital form of money.
” The transition to digital payments has been accelerated by the proliferation and easy access to mobile devices, as well as the emergence of Fintech firms that constantly innovate new products to run on these devices,” CBK stated in its document.
The Central Bank further argued that the introduction of digital currency would lower transaction costs, ease convertibility, instant settlement among other factors.
“Therefore, the consideration to introduce a CBDC in the payments system in Kenya could target cost reduction, interoperability and enhancing cross border payments. Existing proposals indicate that CBDC might hold the potential to achieve much needed interoperability.”
Its introduction means that it would be universally available and accepted as legal tender in other countries that have legalised digital currencies.
“A CBDC, therefore, is a digital currency issued by the central bank and intended to serve as legal tender. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency, only that it is in electronic form.
As opposed to the other forms of electronic money issued by central banks, that is central bank reserves, CBDC designed for retail payments would be universally available.”