Saturday, December 5, 2020

Kenya’s central bank exploring CBDCs due to ‘mushrooming’ of private cryptos

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The Central Bank of Kenya, or CBK, has reportedly started discussions with international central banks to explore the possibility of entering the central bank digital currency space.

CBK governor Dr. Patrick Njoroge told reporters during Georgetown’s DC Fintech week that:

““We [the CBK] are already having discussions with other global players, in various ways, around the introduction of Central Bank Digital Currencies. The push comes as a result of mushrooming of private cryptocurrencies and we are already feeling left out and need to create our own space.”

From Dr. Njoroge’s perspective, the central bank needs to keep a keen eye on the “niche” that private sector cryptocurrencies are vying for. The CBK governor singled out money laundering and the financing of illicit activities as a central concern for the institution. However, he seemed less convinced that the global trend is toward a truly cashless society, characterizing developments as tending to merely a “less-cash” environment.

Dr. Njoroge’s explicit reference to ongoing global research into how a CBDC could, in principle, be made available to the general public, appeared to position central bank-mandated digital currency in explicit competition with decentralized coins.

The CBK governor also expressed a rather dismissive opinion of Bitcoin (BTC), characterizing it as merely a tool for speculation. While he finds the coin’s underlying technology impressive, he argued it was still an invention seeking out a problem to solve. 

With cryptocurrency trading on the rise on the African continent, local industry entrepreneurs are readying themselves — with cautious optimism — for the likely rollout of more robust regulation. Stephany Zoo of Kenya-based exchange Bitpesa told Cointelegraph in Sept. 2020 that while there’s a risk of heavy-handed intervention stifling intervention, better integration with traditional financial infrastructure could equally be a boost for the crypto space.

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