The Bank of Tanzania is waiting for the conclusion of its research into CBDCs before making a final decision on adoption.
Tanzania’s central bank says it is still considering introducing a central bank digital currency (CBDC), but will do so “slowly, cautiously and risk-based” after identifying a number of potential challenges that influence its implementation.
As per one Jan. 14 public announcement from the Bank of Tanzania, since it announced that in 2021 CBDCs can be deployed, the East African country has created a group of different training technologies to evaluate the risks and benefits of CBDCs.
The bank revealed that its team conducted research on different types of CBDC, the type of issuance and management, and whether its CBDC should be token-based or account-based.
“Research up to this point shows that more than 100 countries around the world are at different stages of the CBDC adoption journey with 88 in research, 20 proof of concept, 13 pilots, and 3 in the launch, ” said the bank. The central bank said that at least four countries – Denmark, Japan, Ecuador, and Finland – have publicly canceled plans to adopt CBDC, while six others have withdrawn from the digital currency due to challenges. planning and technology in the implementation process.
Some of the challenges are high implementation costs, lack of funds, poor payment systems, and the risk of damaging the environment, the bank said. The key areas discussed by the group are the risks and controls involved in the issuance, distribution, counterfeiting, and use of funds.
“The analysis of these results shows that the majority of central bankers around the world have been careful in the implementation process of the CBDC, to avoid any risk that could undermine the financial stability of assets and their abundance.” At this time, the bank did not provide a specific timeline for when it will make a decision on the CBDC in Tanzania, but it says it will “continue to review, investigate and follow up with stakeholders, including other central banks, in an effort to reach the appropriate use and technology for issuing Tanzanian shillings in digital form.
Following the efforts of neighboring countries to introduce CBDCs, the Governor of the Bank of Tanzania, Florens Luoga, announced on November 26, 2021, that plans are underway in Tanzania to expand research into digital currency and build the capacity of leader’s central banks. Cryptocurrency has been heavily banned in Tanzania following a November 2019 directive from the Bank of Tanzania stating that digital assets are not recognized under the country’s laws.
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