Tanzania Is Careful With A CBDC Approach After Thorough Research

Key Points:

• After finding a number of obstacles that would hinder its implementation, Tanzania’s central bank says it is still exploring the adoption of a CBDC but will proceed with caution.
• The bank disclosed that its team has investigated several CBDC kinds, mechanisms for issuance and management and if its CBDC should be account-based or token-based.
• The team is also focusing on the risks and safeguards related to the creation, circulation, falsification, and use of currencies.

The Central Bank of Tanzania stated that it is still considering the introduction of a central bank digital currency (CBDC), but after identifying several challenges that may affect its implementation, it will take a “phased, cautious and risk-based approach to the adoption of CBDC.”

At this stage, the bank has not given a clear timetable for when it will make a decision on Tanzania‘s CBDC but said it will “continue to monitor, research and collaborate with stakeholders, including other central banks, in the efforts to arrive at a suitable and appropriate use and technology for issuance of Tanzanian shillings in digital form.”

The bank revealed that its team has conducted research on different types of CBDCs, issuance, and management models and whether it is token-based or account-based.

“The outcome of the research at this point revealed that more than 100 countries in the world are at different stages of the CBDC adoption journey with 88 at research, 20 proof of concept, 13 pilot and 3 at launch. Analysis of these findings indicate that majority of central bankers across the world have taken a cautionary approach in the CBDC implementation roadmap, in order to avoid any potential risks that can disrupt financial stability of their economies” the bank said.

The central bank noted that at least four countries (Denmark, Japan, Ecuador, and Finland) have publicly withdrawn their plans for CBDC adoption, while six others have abandoned CBDCs due to structural and technical challenges in the implementation phase, some of which were high implementation costs, cash dominance, inefficient payment systems and the risk of disrupting existing ecosystems.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Harold

Coincu News