Since 2019 the world has not been the same, and people worldwide have become more creative and innovative in trying to adapt to the new normal. We can all agree that technological development is at its highest since the corona pandemic restricted almost everyone to no or as little movement as possible. People must survive, earn, work, and mostly shop daily for household items. This was impossible with restricted movement, leading to inventions and innovations. People have found alternative means of earning and getting paid, so the digital world of payment has sprouted. The so-called e-wallets have become famous, and almost we can say the whole world is now aware of them.
Digital currencies, or as they are known, cryptocurrency, are now penetrating the world’s largest economies, with countries like China, Lebanon, and the Caribbean already have launched their digital coin. Africa is not being left behind, with countries like Nigeria, Togo, and Zimbabwe already joining the race to launch their digital coins. African governments are now looking into venturing into this new trend. They call the system CBDC. Central banks have been investigating and weighing the options of CBDC as a means of solving the future of digital payments.
The Central Bank of Kenya (CBK) has been upfront researching this, and on 10th Feb 2022, they released a well-worked-out discussion paper focusing on why they need a digital coin in Kenya. CBK term a digital coin as electronic payment means exchanging it for a predetermined amount equivalent to the local fiat currency. Here are some reasons why the CBK wants to launch and proposes CBDC.
- Diversification of payment methods
- Mitigating systematic risks
- Increased global outreach in terms of payment
- Giving the public exactly what it wants
- Coping with growing technological and diverse payment methods
- Reduced costs of payments and transactions
The ease of digital payment has been highly boosted by mobile penetration in the country. CBK sees this as an opportunity to launch CBDC and encourage global trade between countries that have already launched the system. It is a good project, and CBK is positive it will work in Kenya as it has proved effective in other economies. Is this the future of cryptocurrencies, or are we yet to see more? Let’s wait and see; otherwise, get a digital wallet.
