The Central Bank of Kenya has stated that pain points in the country’s payments systems can be addressed by innovations structured around the existing ecosystem and that a central bank digital currency (CBDC) may not be a compelling priority. After a consultation with representatives from commercial banks and institutions from nine countries, the Central Bank of Kenya received more than 100 comments. Respondents highlighted both the benefits of a CBDC such as increased efficiency, as well as risks such as high implementation costs and financial exclusion.
The Central Bank of Kenya noted that countries that have issued a CBDC have faced issues that have hampered implementation and that the recent instability in the crypto market has amplified concerns. Nigeria, for example, has faced issues with adoption while the Bahamas central bank said in May it was working on a strategy to improve CBDC adoption, three years after its launch. Billions were wiped out of the crypto market last year during the so-called crypto winter and the market turbulence was exacerbated by the collapse of stablecoin issuer Terra and crypto exchange FTX.
The Central Bank of Kenya concluded that the allure of the CBDC is fading and that it will continue to monitor developments in CBDCs to inform future assessments.