Kenya is the latest country to investigate the possibility of a national CBDC. According to the Kenyan Central Bank, the introduction of a Central Bank Digital Currency (CBDC) could improve cross-border payments by making them more efficient and cost effective. CBDC is being considered by an increasing number of countries. The Indian government had announced that a digital rupee would be issued in the future year.
The financial regulator stated in a discussion paper on the potential deployment of a digital currency that CDBC solutions may flatten the multi-layered correspondent banking structure and reduce payment chains.
The regulator has given citizens until May 20 to comment on a study that examines both the hazards and opportunities of CBDC. Of course, which has already been implemented in a number of nations around the world, including Nigeria.
The use of the CBDC to facilitate cross-border transactions is a key possibility that the Kenyan central bank regards as having potential value. “While the benefits are difficult to quantify, CBDCs may have the ability to increase efficiency by flattening the multi-layered correspondent banking system and reducing payment chains,” the report stated.
According to CBK, a CBDC might potentially protect the public from the risks of new forms of private money. That’s, by offering more secure and reliable payment services than new forms of privately issued money-like instruments like stablecoins. Nonetheless, it stated that CBDC provides a risk of cyberattacks and other security vulnerabilities, such as data privacy concerns. The “unknowns” would have an influence on central banks’ basic tasks of monetary policy. Then, financial stability, and payment system oversight, according to CBK.
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