Dar es Salaam. Bank of Tanzania (BoT) announced on Thursday that it has started working on its own Central Bank Issued Digital Currency, one month since Nigeria introduced its first Central Bank backed digital currency in Africa, eNaira.
Speaking during the Financial Institutions Conference, BoT Governor Prof Florens Luoga highlighted the impact of digital technology to the financial sector, saying digital technology development in the financial sector has led to the rise of Central Bank Digital Currency (CBDC) and cryptocurrency.
“Several Banks are at different stages of launching their own CBDC, for example, the Central Bank of Nigeria has recently launched eNaira making it the first Bank in Africa to launch CBDC,” said Prof Luoga, expressing the intention of having Tanzania’s CBDC in the near future.
To that end, Prof Luoga shared the roadmap toward Tanzania’s CBDC, saying: “In making sure our country is not left behind, Tanzania Central Bank has started preparations towards having its own CBDC. The preparations include capacity building of experts, raising awareness to stakeholders and research.”
Globally, Nigeria and Bahamas are the only countries that has so far made their CBDC fully open to the public. There are more than 15 countries that have piloted digital currency in their zones including China, South Korea and the Eastern Caribbean Currency Union (Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines).
Tanzania’s interest in digital currency was sparked by President Samia Suluhu Hassan on June 13, 2021, when she tasked the Central Bank to study digital currencies and cryptocurrency so as to make sure Tanzania is not left behind in the ongoing revolution in the financial sector.
CBDC has emerged as the government solution to the growing interest in cryptocurrencies which are essentially not controlled by government or specific individuals.
On the question of cryptocurrency, as other Central Banks, Prof Luoga expressed hesitation.
“Regarding cryptocurrencies the Central Bank has warned the public on risks involved in engaging in those currencies,” using the example of how El Salvador is being challenged by the World Bank, IMF and the like after adopting Bitcoin as its legal tender.