Top cryptocurrency news: IMF Warns Kenyan Central Bank Against Introducing a CBDC: Report
The International Monetary Fund (IMF) has warned the Kenyan central bank that its proposed digital shilling must not interfere with the current digital currency used in the private sector.
The lender said that the planned central bank digital currency (CBDC) must not hinder such positive achievements in digitalization by displacing clients from banks and other digital financial institutions.
According to the International Monetary Fund (IMF), the proposed digital currency from the Kenyan central bank should complement the current digital currency used by the private sector, not replace it. The global lender emphasized that if safeguards are not put in place, a digital currency issued by the Central Bank of Kenya (CBK) may possibly reduce transaction costs to the point of driving mobile money companies out of business, such as M-Pesa.
According to sources, the IMF wants the CBK's digital shilling document to detail how the central bank intends to keep the payment system open and competitive.
The document might indicate that the objective of any CBDC issue is to supplement rather than replace existing private-sector digital payment options, and it could also reaffirm CBK's commitment to an open, competitive payment system. The IMF is quoted as saying, "We highlight in this respect that the balance between central bank currency and private sector payment instruments is not fixed throughout time, and there is no 'right' balance."
Aside from fintech, the CBK's proposed digital shilling also threatens banks, which have made significant headway in building digital solutions. According to the IMF, the CBK's digital shilling paper must demonstrate that the proposed digital currency would have no negative consequences. It must not hinder such positive digitalization advancements by removing clients from banks and other digital financial providers.
The IMF also emphasized that the digital shilling should not increase the cost of borrowing for banks or deprive them of "useful information obtained via client connections."
