Tanzania Shifts Closer to Own Digital Currency

Key Takeaways

  • Bloomberg’s most recent tweet revealed that Tanzania is all set to adopt digital currency issued by the central bank, 
  • Tanzania has sent officials to countries with more experience in CBDCs. 
  • In October, Nigeria became the first African country to use digital currency. Other countries piloting or researching CBDCs include China, the Bahamas, the Central African Republic, Kenya, and Zambia.

As per Bloomberg’s recent tweet, Tanzania is all set to introduce a central bank digital currency. This initiative is to help offset the surging popularity of cryptocurrencies in the country.

”It’s important for us to provide a central bank digital currency as a safe alternative because many people are being affected by cryptocurrency speculators,” said Florens Luoga, Bank of Tanzania Governor.

In an interaction on Monday in Dar es Salaam, the governor said that is it impossible for the bank to ignore the technological advancement of money.

The Bank for International Settlements reports that nine out of ten central banks are considering introducing their own digital currency. The Bank for International Settlements is a central bank-owned international financial institution that “fosters international monetary and financial cooperation and operates as a bank for central banks.”

 A CBDC is a central bank-issued digital legal tender. It is equivalent to fiat money and can be exchanged for it one for one. CBDCs are regarded as national currency by governments, as opposed to their crypto counterparts, such as Bitcoin and Ethereum, which are unrelated to fiat money.

According to Luoga, Tanzania has sent officials to countries with more experience in CBDCs, such as Nigeria, to learn from them. He declined to say when Tanzania’s will go into effect.

Last year, in November Governor Florens Luoga, revealed the news at the central bank-organized “20th Conference of Financial Institutions (COFI)”. 

Luoga said the Bank of Tanzania has already begun preparations to build its own Central Bank Digital Currencies (CBDCs) to ensure that the country does not lag in the adoption of CBDCs.

Nigeria introduced its CBDC, the eNaira, last year. As a result, it is now the only economy where CBDCs are legal, alongside the Bahamas and five East Caribbean islands. This is an initial list that will almost probably be expanded. CBDC pilot programs are under-conducted in at least 17 countries. 

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Baisakhi Mishra

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