The Bank of Tanzania will first study to figure out the challenges associated with its future national CBDC.
The Central Bank Digital Currency (CBDCs) is a concept, which came into light after the entry of stablecoins in the Crypto market. The majority of the Central Banks in the world are studying & developing their national CBDC so that they can upgrade their traditional digital payment system to a better one.
Tanzania is also a CBDC-interested country. Initially, in 2021, The Bank of Tanzania stated that they planned to roll out the national CBDC.
On 14 Jan 2023, Tanzania’s central bank released a public notice and confirmed that it established a CBDC-dedicated multidisciplinary technical team to explore the risks and advantages of CBDCs.
Bank also disclosed that its team did research on CBDC on behalf of several models. In particular, research was focused to find out whether the CBDC issuance model should be account-based or token-based, more likely to stablecoins.
“The outcome of the research at this point revealed that more than 100 countries in the world are at different stages of the CBDC adoption journey with 88 at research, 20 proof of concept, 13 pilot, and 3 at launch.”
Tanzania Central Bank also noted that at least 4 countries publicly announced that they cancelled their CBDC adoption plan and few distanced from CBDC because of the technical & implementation phase challenges.
The Central Bank also revealed its own point of view on the challenges associated with CBDC and stated that its self-challenges are high implementation costs, the risk of the dominance of cash, inefficient payment systems, and the risk of disrupting the existing traditional financial ecosystem.
It is worth noting that besides the implementation cost, Tanzania’s Central Bank can use the strategies followed by China. And also country can take help from blockchain technology focussed Fintech companies like Ripple, which is open to helping the countries to adopt blockchain technology.