Introduction to Tanzania’s CBDC Considerations
Tanzania is tiptoeing into the world of Central Bank Digital Currencies (CBDCs). The Bank of Tanzania is considering the introduction of a digital currency but is playing it safe—like a cat approaching a bath. Following their 2021 announcement regarding a potential CBDC rollout, they’re now leaning on a phased, cautious, and risk-based approach.
Research and Development Efforts
Since the initial announcement, Tanzania has assembled a multidisciplinary technical team tasked with diving deep into the murky waters of CBDCs. Their mission? To explore the risks and benefits associated with this novel concept. So far, they’ve researched various types of CBDCs, weighing issues like token-based versus account-based models.
The Global Landscape of CBDCs
The Bank of Tanzania revealed some eyebrow-raising stats: over 100 countries are engaging in various stages of CBDC adoption. Here’s the breakdown:
- 88 countries are still in the research phase.
- 20 have moved to proof of concept.
- 13 are in pilot testing.
- 3 have actually launched their digital currencies.
On the other hand, it’s worth noting that at least four countries—Denmark, Japan, Ecuador, and Finland—have publicly shelved their CBDC plans. Additionally, six other nations have faced hurdles that prompted them to abandon digital currency aspirations. The reasons? High implementation costs, the persistent dominion of cash, and technological hiccups are just a few of the challenges.
Challenges Ahead
The Bank of Tanzania has identified a treasure trove of challenges that could disrupt its smooth sailing into the digital currency seas. Key issues include:
- High implementation costs
- Existing cash dominance
- Inefficient payment systems
- Potential disruption of financial ecosystems
These hurdles have led many central bankers worldwide to adopt a cautionary approach to CBDC implementation. Better safe than sorry, right?
Current Status of Tanzania’s CBDC Plans
As of now, the Bank of Tanzania isn’t dishing out any timelines. They’re committed to continuously monitoring, researching, and collaborating with various stakeholders, including other central banks. Sounds like a classic case of “Let’s keep our options open.”
Tanzania’s Stance on Cryptocurrencies
It’s important to mention that while Tanzania contemplates a CBDC, cryptocurrencies remain a different animal altogether in the country. Following a directive in November 2019, the Bank of Tanzania has essentially put a
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