The Central Bank of Kenya (CBK) has received over 100 comments from stakeholders, including the public, commercial banks, and tech firms, regarding the potential issuance of a central bank digital currency (CBDC). The comments highlighted the potential benefits and risks associated with a CBDC, prompting the central bank to take a measured approach in considering the rollout of a digital shilling. While the CBK acknowledges the advantages of a CBDC, it deems addressing the country’s payment system pain points through existing innovative solutions a higher priority.
The CBK had previously released a discussion paper in February 2022, inviting public input. The bank also collaborated with other central banks on proofs-of-concept for CBDCs. However, the CBK notes that the allure of CBDCs is fading on the global stage, citing challenges faced by countries that have already issued CBDCs. The recent instability in the global crypto market has further amplified concerns, leading the CBK to emphasize the need to review innovation and technology risks associated with CBDCs carefully.
CBK prioritizes existing payment solutions and monitoring CBDC developments
While the CBK recognizes the potential benefits of a CBDC, it currently views the implementation of a CBDC in Kenya as a non-compelling priority in the short to medium term. The bank plans to monitor global developments in CBDCs to inform future assessments and decision-making. It acknowledges that other countries adopting CBDCs faced challenges during implementation, leading to reconsidering priorities.
The CBK highlights the availability of alternative payment solutions within Kenya’s existing ecosystem, including the widespread usage of mobile money payments. Safaricom’s M-Pesa platform, which offers various financial services, has become a dominant mobile payment player, with over 30 million active users. The CBK believes existing solutions can address the country’s payment system pain points and provide a secure, fast, efficient, and accessible network for all Kenyans.
While the CBK’s immediate focus is not on CBDC implementation, it remains open to the potential of a digitized Kenyan Shilling. By prioritizing existing solutions and closely monitoring global CBDC developments, the CBK aims to ensure that future decisions align with the country’s needs and challenges.
