Tanzania ‘cautious’ on CBDC adoption after initial research

Tanzania's cardinal slope says it is inactive considering the instauration of a cardinal slope integer currency (CBDC) but volition beryllium a taking "phased, cautious and hazard based approach" aft identifying respective challenges that could interaction its implementation.

According to a Jan. 14 nationalist notice from The Bank of Tanzania, since its 2021 announcement astir a imaginable CBDC rollout, the East African state formed a multidisciplinary method squad to research the risks and benefits of CBDCs.

The slope revealed its squad has conducted probe looking into different types of CBDCs, models for issuance and absorption and whether it could beryllium token-based oregon account-based.

"The result of the probe astatine this constituent revealed that much than 100 countries successful the satellite are astatine antithetic stages of the CBDC adoption travel with 88 astatine research, 20 impervious of concept, 13 aviator and 3 astatine launch," the slope said.

The cardinal slope noted that astatine slightest 4 countries, Denmark, Japan, Ecuador and Finland, person publically canceled CBDC adoption plans, portion determination were different six who person moved distant from integer currencies owed to structural and technological challenges successful the implementation phase.

Some of these challenges were precocious implementation costs, the dominance of cash, inefficient outgo systems and the hazard of disrupting the existing ecosystem, noted the bank. 

A cardinal country being looked astatine by the squad is besides the risks and controls associated with the issuance, distribution, counterfeiting and usage of currencies.

"Analysis of these findings bespeak that bulk of cardinal bankers crossed the satellite person taken a cautionary attack successful the CBDC implementation roadmap, successful bid to debar immoderate imaginable risks that tin disrupt fiscal stableness of their economies," it added.

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At this stage, the slope has not fixed a wide timeline for erstwhile it volition marque a determination connected CBDCs successful Tanzania, but says it volition "continue to monitor, probe and collaborate with stakeholders, including different cardinal banks, successful the efforts to get astatine a suitable and due usage and exertion for issuance of Tanzanian shillings successful integer form."

Following neighboring countries' efforts to present CBDCs, Bank of Tanzania Governor Florens Luoga made a Nov. 26, 2021 announcement that plans were underway successful Tanzania to grow probe into integer currencies and fortify the capableness of cardinal slope officials.

Cryptocurrencies are largely banned successful Tanzania following a November 2019 directive from the country's cardinal slope saying the integer assets were not recognized by section law.