Uganda’s central bank is considering issuing a digital currency and has not banned cryptocurrencies, but has concerns about the technology’s risks, including consumer protection and financial inclusion, a senior bank official said Friday. .
“The Bank of Uganda is currently doing preliminary studies on whether or not a central bank digital currency should be considered and especially exploring what policy objectives it would address,” said Andrew Kawere, director of national payments at the bank.
African governments have approached digital currencies differently. Nigeria’s central bank banned local banks from working with cryptocurrencies last year before launching its own digital currency, while the Central African Republic last month adopted bitcoin as its official currency.
Kawere said there is no deadline for completing studies or issuing a digital currency, but said he is particularly focused on the risks surrounding the technology.
“Consumer protection – this is a major concern for us as the Bank of Uganda. In the country, we have low levels of digital financial literacy… the population needs a little protection from some of these very advanced financial innovations.”
Kawere said access would also be an issue when launching such a coin because of the low penetration levels of necessary infrastructure such as smartphones, computers and the internet. “It can lead to financial exclusion for those who cannot have access (to the currency).”
He said the bank has concerns about cryptocurrency volatility, which he says undermines its ability to function as a store of value.
Cryptocurrencies are already informally in use in Uganda, Kawere said, but the central bank warns licensed payment service providers to take it slow as agencies study the technology and develop regulatory mechanisms.
Ugandans received cryptocurrencies worth the equivalent of about $4.8 billion between March 2019 and March 2022, according to blockchain data platform Chainalysis.
“So the Bank of Uganda did not ban cryptocurrencies, we simply applied some speed brakes,” Kawere said.
Source: CNN Brasil
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