The Bank of Tanzania is cautiously preparing a central bank digital currency (CBDC).
The country’s central bank said it will “continue to monitor, research and work with stakeholders, including other central banks, to arrive at appropriate and appropriate use and technology for issuance of Tanzanian shillings in digital form,” according to a Saturday (January 14) Press Release.
However, the bank, which first announced its digital currency project in May last year, said it was taking a “phased, prudent and risk-based approach” to launching a CBDC while examining the challenges surrounding the launch.
These challenges include inefficient payment systems, high implementation costs, the risk of disrupting the country’s financial system, and the popularity of cash transactions.
The bank said its research into CBDC adoption in other countries showed that “a majority of central bankers around the world have taken a cautious approach in the CBDC implementation roadmap to avoid potential risks to the financial stability of their economies.” might disturb”.
Even with this slower approach to CBDC adoption, digital currencies have not always garnered consumer enthusiasm.
For example, last month PYMNTS noted comments from a former People’s Bank of China official, Xie Ping, who said he was disappointed with the results of that country’s test for its digital yuan.
“The cumulative circulation of the digital yuan over the two-year process was only 100 billion yuan ($14 billion),” Xie told a conference at Tsinghua University. The number suggests that “use was low and very inactive.”
“The results are not ideal,” said Xie, a former director general for research at the bank. “What needs to change is that the digital yuan only acts as a replacement for cash and only for consumption.”
Across the pond, the Bank of England’s digital pound project hasn’t garnered much support from the UK Parliament. The cross-party Lords Economic Affairs Committee has described CBDCs as “a solution to a problem” in a recent report.
Nigeria’s central bank has had a CBDC since 2021, but was persuaded last year to chide the country’s banks for their “apathy” in promoting the coin to the country’s 200 million citizens.
As of October last year, 1 million people had downloaded the CBDC-connected digital wallet, with users making about 700,000 transactions worth $18.3 million.
At the time, PYMNTS noticed the discrepancy: 300,000 more wallets had been downloaded than were actually used.
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