A scheme to develop a central bank digital currency (CBDC) is underway after a study showed that the currency is needed in the country, the National Bank of Rwanda Governor, John Rwangombwa, told lawmakers on November 27.

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Rwangombwa made the disclosure while presenting the central bank’s annual report for the financial year 2022/2023 to a joint plenary sitting of Parliament. The CBDC is the digital form of a country's currency, which is regulated by its central bank. According to the International Monetary Fund (IMF), a CBDC offers a safe store of value and an efficient means of payment.

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During the parliamentary session, MP Pie Nizeyimana wanted to know the progress made on this study initiated and led by the central bank to consider how the digital currency can be used in Rwanda, and its advantages.

"On CBDC, we completed the first study to see whether it is necessary to set up the digital currency. The study indicated that it is relevant, it can be done, and it is necessary,” Rwangombwa replied.

The bank, he indicated, held talks with financial institutions and various public entities about such a currency, and provided a related report to the government so that it deliberates on it at the cabinet level, prior to taking the discussion to the general public.

"After that, we will do a trial on how that can be implemented, and which technology we can use. It is an ongoing process that can take about two years before we issue a CBDC for use,” he said.

In the meantime, he pointed out that they are trying to borrow a leaf from studies carried out by other central banks that could be a step ahead.

In early 2022, the National Bank of Rwanda Deputy Governor Soraya Hakuziyaremye announced that Rwanda’s stand on the use of digital currency would be known by the end of the same year. She indicated that, by the end of December 2022, it was expected the country would have conducted research to establish whether it would issue the CBDC, or not.

According to a Bank for International Settlements (BIS) survey in 2022 – on central bank digital currencies and crypto – 93 per cent of surveyed central banks are engaged in some form of CBDC work, and more than half are running concrete experiments or working on pilots. As work on CBDC advances, central banks’ uncertainty about short-term issuance of a CBDC is fading, it indicated.

Globally, 11 countries have fully launched a digital currency (CBDC). They include Bahamas, Jamaica, and Nigeria [the first in Africa], according to the Atlantic Council, an American think tank in the field of international affairs.

It added that China’s CBDC pilot, which currently reaches 260 million people, is being tested in over 200 scenarios, some of which include public transit, stimulus payments, and e-commerce.

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On the question of whether there is a policy to allow the use of cryptocurrencies such as bitcoin, Rwangombwa advised the public against using them as of now because there are people who suffered huge losses from them.