Rwanda is set to embark on the creation of a Central Bank Digital Currency (CBDC) following a comprehensive study that affirmed the necessity of such a digital currency in the country.
The announcement was made by John Rwangombwa, Governor of the National Bank of Rwanda, during the presentation of the central bank’s annual report for the financial year 2022/2023 to the Parliament.
A CBDC represents the digital version of a nation’s currency, regulated by its central bank.
According to the International Monetary Fund (IMF), a CBDC provides a secure store of value and an efficient means of payment.
In response to inquiries from MP Pie Nizeyimana regarding the progress of the central bank’s study on the implementation of a digital currency, Governor Rwangombwa revealed, “On CBDC, we completed the first study to see whether it is necessary to set up the digital currency.
The study indicated that it is relevant, it can be done, and it is necessary.”
Rwangombwa mentioned that the central bank has engaged in discussions with financial institutions and various public entities, providing a report to the government for consideration at the cabinet level before involving the general public in the discussion.
He outlined the next steps, stating, “After that, we will do a trial on how that can be implemented, and which technology we can use. It is an ongoing process that can take about two years before we issue a CBDC for use.”
In the interim, Rwanda plans to glean insights from international studies conducted by entities that are further along in their CBDC initiatives.
The National Bank of Rwanda Deputy Governor Soraya Hakuziyaremye had previously indicated that the country’s stance on digital currency would be revealed by the end of 2022, following extensive research.
Globally, the momentum toward CBDCs is evident, with 93% of surveyed central banks engaged in CBDC work, and more than half actively experimenting or piloting programs, according to a Bank for International Settlements (BIS) survey in 2022.
Notably, 11 countries, including the Bahamas, Jamaica, and Nigeria, have already fully launched a CBDC.
While discussing the use of cryptocurrencies such as bitcoin, Governor Rwangombwa cautioned the public against their use due to the potential for significant financial losses, emphasizing the need for caution and prudence in adopting such technologies.
