Kenya Releases Discussion Paper on CBDCs

The Central Bank of Kenya (CBK) has released its discussion paper on the possibility of a central bank digital currency (CBDC) and is now awaiting feedback from the public regarding the potential benefits and risks associated with it along with the regulatory concerns. Those willing to participate have until May 20, 2022, to submit their comments. In a discussion paper examining the potential use of a digital currency, the central bank said that CDBC solutions could flatten the multi-layered correspondent banking structure and shorten the payment chains. “This discussion paper is part of CBK’s initiatives to ensure informed policy review regarding financial sector innovations. CBK invites the public, industry and stakeholders to review this discussion paper on CBDC and provide feedback and ideas to be considered when assessing the use case for CBDC in Kenya,” it said. According to the financial institution, a CBDC could potentially shield the public from the risk of new forms of private money by providing safer and more trustworthy payment services in comparison to the new forms of money such as stablecoins. Overall, CBDC also presents an opportunity for cyberattacks and other security threats, including data privacy issues. Nigeria became the first country in Africa to launch its central bank digital currency (CBDC), in October last year while Ghana is at the advanced stage of launching its digital currency. Similarly, Zambia...