After months of research, the Central Bank of Tanzania recently announced that it has chosen a more cautious and risk-based approach towards adopting its Central Bank Digital Currency (CBDC). During the research phase, the central bank said it paid special attention to “the risks and controls associated with the issuance, distribution, counterfeiting, and use of currencies.”
Finding the right CBDC technology
The Bank of Tanzania (BOT) announced on January 3. 14 that it “has taken a phased, cautious and risk-based approach to adopting the Convention on Biological Diversity [central bank digital currency]. The bank also said that it would continue its efforts to find “appropriate and appropriate use and technology for the issuance of the Tanzanian shilling in digital form.”
According to a statement on the bank’s website, the BOT said it chose a more cautious approach after spending months researching and exploring the pros and cons of issuing the digital currency. During this period, the BOT said it found that other central banks had adopted the same stance, while six countries had chosen to de-adopt CBDCs “mainly due to structural and technological challenges in the implementation phase.”
As reported by Bitcoin.com News in May 2022, the Central Bank of Tanzania said that it intends to launch its own central bank digital currency as this has become a trend among central banks. In addition, the bank said that the digital currency would be “safe[r] An alternative because many people are influenced by cryptocurrency speculators.”
However, fears that CBDCs could disrupt the country’s financial system have forced the BOT, which has indicated it is ready to launch in the first half of 2022, to adopt a more conservative approach.
Risks associated with CBDCs
Meanwhile, during the research phase, the Central Bank of Tanzania revealed that it considered the type of digital currency to be issued, the issuance models, the format of the digital currency, as well as the “degree of anonymity or traceability.” The statement also indicated that the bank has paid more attention to related risks.
“Special attention is also paid to the risks and controls associated with the issuance, distribution, counterfeiting and use of currencies,” the central bank said.
In the statement, the BOT said that once the research is complete, the Tanzanian public will be provided with information on the way forward, potentially including a roadmap for “the transition to CBDC adoption.”
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