Tanzania ‘cautious’ on CBDC adoption after initial research
Tanzania's central bank says it is still considering the introduction of a central bank digital currency (CBDC) but will be a taking "phased, cautious and risk based approach" after identifying several challenges that could impact its implementation.
According to a Jan. 14 public notice from The Bank of Tanzania, since its 2021 announcement about a possible CBDC rollout, the East African country formed a multidisciplinary technical team to explore the risks and benefits of CBDCs.
The bank revealed its team has conducted research looking into different types of CBDCs, models for issuance and management and whether it could be token-based or account-based.
"The outcome of the research at this point revealed that more than 100 countries in the world are at different stages of the CBDC adoption journey with 88 at research, 20 proof of concept, 13 pilot and 3 at launch," the bank said.
The central bank noted that at least four countries, Denmark, Japan, Ecuador and Finland, have publically canceled CBDC adoption plans, while there were another six who have moved away from digital currencies due to structural and technological challenges in the implementation phase.
Some of these challenges were high implementation costs, the dominance of cash, inefficient payment systems and the risk of disrupting the existing ecosystem, noted the bank.
A key area being looked at by the team is also the risks and controls associated with the issuance, distribution, counterfeiting and usage of currencies.
"Analysis of these findings indicate that majority of central bankers across the world have taken a cautionary approach in the CBDC implementation roadmap, in order to avoid any potential risks that can disrupt financial stability of their
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