The Central Bank Digital Currency (CBDC) is intended to serve as a legal tender.
Kenya is looking into a digital currency regime that is being touted as a game changer of the digital money payment space with consumers reaping the full benefits of faster and cheaper transactions.
A cross section of economists polled by The EastAfrican shared the view that the proposed regime is critical for faster and cheaper payments including cross-border payments, with stiffer competition expected with the existing mobile money payment platforms which would drive down transaction costs .
The Central Bank Digital Currency (CBDC) is intended to serve as a legal tender.
“Digital currency will be a game-changer in many ways. The quick wins will be the lower transaction fees and ability to move small amounts of money which is where most Kenyans are.
‘‘So it will make financial services accessible to even more Kenyans,” said Ken Gichinga, chief economist at Mentoria Economics.
“Central bank also stands to benefit since it will be spared from printing cost associated with physical currency and there would be many other innovations to come up that will be possible because of the digital currency.
‘‘The challenge to the current payment system will be for them to be more innovative but they will continue to coexist.”
Mr Gichinga says digital currency will put more pressure on the existing players in the market to be more innovative and competitive in terms of pricing.
Dr Samuel Nyandemo, a senior lecturer at the University of Nairobi School of Economics, said the CBDC will compel other competitors to be more innovative and perhaps revise tariffs.
“Much focus shall be on affordable mobile phone financial services by cutting out middlemen, thereby bringing stiff competition to other digital currency providers like M-Pesa, Airtel Money and T-Kash.’’
“But, the Kenyan economy is ripe for digital currency.”