Tanzania on alert regarding CBDC adoption after a research

The central bank of Tanzania says it is still looking for the launch of a central bank digital currency (CBDC) but now will go for a phased, cautious and risk-based approach” after recognizing different challenges that can influence its execution.

The Bank of Tanzania issued a public notice on January 14, from its 2021 publicization relating to a probable CBDC proclamation, the East African country made an associative technical team to find out the risks and profits of CBDCs.

The bank disclosed its team has done research seeking various types of CBDCs, various models for issuance and management, and also if the CBDC should be based on token or account.

“The result of the research at this level disclosed that over 100 countries over the world are at different levels of adopting the CBDC having 88 research, 20 proof of concept, 13 pilot and 3 at the introduction,” as per the bank.

The challenges

The central bank also pointed out that countries like Denmark, Japan, Ecuador, and Finland have officially called off the CBDC adoption plans, and at the same time another six shifted away from virtual currencies because of organizational and technological challenges in the execution stage.

A few challenges that are disclosed are high execution costs, the leading of cash, unsuitable payment systems, and the risk of playing havoc with the existing ecosystem, the bank revealed.

A crucial area being examined by the team is also considered as the risks and controls linked with the disclosure, spread, faking, and use of currencies.

“Examining these detections shows that most parts of the central bankers over the world have taken an adminotary step in the CBDC execution roadmap, just to not be a suspect of any potential risks that can disturb the financial stability of their economies,” it concluded.

At this point of time, the bank hasn’t given a fixed time when it will take a decision on CBDCs in Tanzania, but it suggests that it will be monitoring, doing research, and partnering with stakeholders, adding different central banks, in order to reach at a given and proper use and technology for issuance of Tanzanian mousetraps in digital form.”

Adapting the nature of neighboring countries to launch CBDCs, the Bank of Tanzania Governor Florens Luoga gave a statement on November 26, 2021, which says that the plans were ongoing in Tanzania to grow research in virtual currencies and make the capacity of central bank officials strong.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing