Ingxelo: IMF Warns Kenyan Central Bank Against Introducing a CBDC That Harms Fintechs and Banks

Ingxelo: IMF Warns Kenyan Central Bank Against Introducing a CBDC That Harms Fintechs and Banks

The global lending institution, the International Monetary Fund (IMF) has told the Kenyan central bank that its proposed digital shilling must “do no harm” to existing private sector digital money. The lender insisted the proposed central bank digital currency (I-CBDC) must “not stifle such welcome digitalisation developments by taking away customers of banks and other digital finance providers.”

Keeping Payment System Open and Competitive

I-International Monetary Fund (IMF) has reportedly said the Kenyan central bank’s proposed digital currency should complement and not threaten the existing private sector digital money. The global lender insisted that if no safeguards are put in place, a digital currency issued by the Central Bank of Kenya (CBK) can potentially lower transaction costs to the point of driving out mobile money operators such as M-Pesa out of business.

According to a report by The Nation, the IMF, in its commentary, said it wants the CBK’s digital shilling document to outline how the central bank plans to keep the payment system open and competitive.

“The paper could state the intent of potential issuance of CBDC is to complement rather than substitute existing private-sector digital payment solutions, and affirm CBK’s commitment to an open, competitive payment system. We note in this regard that the balance between central bank money and private sector payment instruments is not fixed over time, and there is no ‘right’ balance,” the IMF is quoted as stating.

CBDC Must Do No Harm

Besides posing a threat to fintechs, the CBK’s proposed digital shilling also poses a threat to banks which have also made “remarkable progress in developing digital solutions.” According to the IMF, the CBK’s digital shilling paper must make clear that the proposed digital currency will “do no harm.” It must “not stifle such welcome digitalisation developments by taking away customers of banks and other digital finance providers.”

The IMF also argued that the digital shilling must also not result in the increased cost of financing for banks, or deny “banks of valuable information they obtain through establishing customer relations.”

Register your email here to get a weekly update on African news sent to your inbox:

Tags in this story

What are your thoughts on this story? Let us know what you think in the comments section below.

Terence Zimwara

Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.














Image Credits: Shutterstock, Pixabay, Wiki Commons, Photo credit: Authentic travel via Shutterstock

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Maximumhorrors.com does not provide investment, tax, esemthethweni, or accounting advice. Neither the company nor the author is responsible, ngokuthe ngqo okanye ngokungathanga ngqo, ngawo nawuphi na umonakalo okanye ilahleko ebangelwe okanye ekutyholwa ukuba ibangelwe okanye ngokunxulumene nokusetyenziswa okanye ukuxhomekeka kuwo nawuphi na umxholo, goods or services mentioned in this article.

Read disclaimer

Yabelana

Unokuba Ulahlekile