The Central Bank of Uganda is considering issuing digital currency and did not ban cryptocurrenciesbut my concerns about risks from technologies including consumer protection and financial inclusiona senior bank official said Friday.
“The Bank of Uganda is currently conducting preliminary research on whether to consider the central bank’s digital currency … and is particularly studying what policy objectives it will address,” Andrew Kaver, the bank’s director of national payments, told Reuters.
“Is it financial inclusion that we want to address, is it payments, is it supporting innovation in the financial space? This is an unanswered question. “
African governments have approached digital currencies differently. Nigeria’s central bank banned local banks from working with cryptocurrencies last year before launching their own digital currency, while the Central African Republic last month adopted bitcoin as the official currency, the first in Africa.
Kaver said they have no deadlines for completing their studies or issuing digital currency, but said they are particularly focused on the risks associated with the technology.
“Consumer protection is a very big concern for us as the Bank of Uganda. In Uganda, we have a low level of digital financial literacy … the population needs protection from some of these rather advanced financial innovations. ”
Cover said access would also be a problem when deploying such currency due to the low level of penetration of necessary infrastructure such as smartphones, computers and on the Internet.
“This could lead to a financial exemption for those who cannot have access (to the currency).”
He said the bank has reservations about cryptocurrency volatility, which he said undermines their ability to function as a repository of value.
Cryptocurrencies have already been used unofficially in Uganda, Cover said, but the central bank has warned licensed payment service providers to use them slowly while the regulator studies technology and develops regulatory mechanisms.
Ugandans received cryptocurrency worth the equivalent of approximately $ 4.8 billion between March 2019 and March 2022, according to the blockchain data platform Chainalysis.
“So the Bank of Uganda didn’t ban cryptocurrency, we just applied some speed brakes,” Cover said.