Digital currency refers to any means of payment that exists purely in electronic form. It is not tangible like a bill or a coin and is accounted for and transferable by use of electronic gadgets. One well-known form of digital currency is Bitcoin, which is a cryptocurrency that uses blockchain technology.

According to Forbes Advisor, a Central Bank Digital Currency (CBDC) is a digital currency that would be issued and overseen by a country’s central bank. Think of it like Bitcoin, but if Bitcoin had the full backing of the government.

The National Bank of Rwanda (BNR) recently announced that it was studying the possibilities of issuing its own CBDC in response to global trends in digital currency.

The New Times talked to a cross-section of experts and they had their say.

Teddy Kaberuka, Economist

Blockchain technology has lasted for more than 10 years. There has been pressure or extension of interest from different people who wanted it to be available in all countries. Because it is technology-oriented, it made more countries think regarding that world’s economy which is going digital. They thought of what they could do to embark on the existing technology. There was no one controlling this technology and some countries started researching and setting its policy of control.

About the market, digital currency has different portions of the market. We have people who are digital experts with digitised life; those who have mobile phones and can access the internet. There are the ones who are ready for this technology. Those companies that deal with online transactions are also ready. Then, we have another portion of the population who are digitally excluded.

It includes those who can’t write or read and those with no access to electricity and internet. The research is expected to determine how these people will survive if we are to embark on this technology.

I think we will find ourselves having two parallel systems; paper money and digital currency that communicate so that whoever doesn’t have access to one can access the other. But if you predict the future, maybe in the next 20 years, I see the cash disappearing as we enter the digital world.

The policy makers also need to think on how to reduce the digital gap in the population. Some strategies include increasing access to electricity, internet access and infrastructure. Moreover, people need to be educated on the use of technology and there should be inventive mechanisms for people with low income so that they can also access technology by cutting the cost of internet access and other forms of technology.

This is the best time to transition to this technology since Covid-19 measures don’t entertain physical contact of people.

Clément Uwajeneza, Chairman of the ICT Chamber

I think the Central Bank is looking if there will be importance in using digital currency. This research is good because it will help people understand the relationship between technology and economy. It will get us solutions and help technologists innovate on cryptocurrency by putting into force what is more significant. I also expect this research to tell us if the Rwandan market is ready for digital currency.

In my view, I don’t see something new about the use of digital currency rather than just being a new technology. I don’t see it as of a bigger value than developing the existing cashless means like mobile money and other innovations. I don’t see anything great that this currency can help in this time of Covid-19 than what Mobile Money or other cashless ways of transaction help us.

In international affairs, cryptocurrency doesn’t help that much. It’s more of a speculative currency where people buy it to gain profit quickly by selling the currency like bitcoin at a high rate.

It hasn’t even proven that transacting digital currency will be cheaper than the usual ways of transaction. If BNR will control it, it will need the support of other financial firms and those firms will set transaction fees. So, I don’t think it will be cheaper.

There are cashless means that can be enforced like mobile money, E-banking and interoperability (to connect systems of banks in order to communicate) and this can make transfers easier and quicker.

Innocent Mutuyimana, Business Management and Financial expert

I started using digital currency and cryptocurrency in 2011; it’s been ten years. People call me the father of these currencies in Rwanda.

There are many benefits if this research is implemented. One benefit of using digital currency is where our country is heading with technology. We want to reach the unbanked people; those with bank accounts but cannot access mobile banking. Also, the initiative of a cashless economy which needs to be enforced in this period of Covid-19 is another reason.

Of course, the government has established infrastructure like the fibre optic and now the internet can be accessible, but we also need to look at the cybersecurity risks.

Features and security of the internet must be enforced, laws that are digital currency-friendly must be set with enough regulatory framework and the internet must be accessible to many people.

If Rwandan currency becomes digital, it will require every user to be on the internet. I think what can be the challenge is for all Rwandans to have access to the internet and want to use this technology.

Digital currency is something that is needed to Rwandans especially in this period. I can compare the working of digital currency with mobile money or e-banking but with faster transfer.

Digital currency can help in E-commerce. For example, if you buy a car online and pay through internet banking, the bank transfer is completed in at least 24 to 72 hours but with digital currency it is instant because it’s coded with block chain technology.

However, it’s not something that can be immediately implemented. There must be a transition. You can’t just take Rwandan currency and make it digital. It’s something that should be done in phases so that it doesn’t overwhelm people.

Carole N’zigire Runiga, Master’s student in Science of Economics at Kigali Independent University

In Rwanda’s case, the digital currency represents a significant step towards a cashless economy. The National Bank of Rwanda has been working on measures to promote the usage of digital payments in the nation. We saw the value of this during the Covid -19 crisis as it prevented the economy from suffering.

Digital currency reduces the cost of maintaining and moving cash. Financial inclusion is critical since it allows any Rwandan with even a modest amount of money to trade, save, and invest. The digital money will also bring policymakers and the general public closer as there will be more awareness, transparency and communication between the two sides. Even if there might be issues with currency acceptance, digital money will increase financial literacy in Rwanda, particularly among the rural population.

Since there will be direct communication and information on the currency, the digital money will make monetary policy easier to implement and prevent future users from facing cyber frauds and risks.

The central bank’s digital currency will lower the cost of producing money and since it is a new topic, it can significantly improve research and innovation as there are several questions about the best platforms to be used in Rwanda and the best implementation tools that will not disrupt the economy’s functionality, particularly if people abruptly change their monetary behaviour.

The world has entered a digital world, and has had a significant impact on the evolution of money. Rwanda as a small open economy should follow suit and attempt to keep up with the latest developments.