Bank of Tanzania (BOT) has confirmed that it will adopt a cautious approach in developing its central bank digital currency (CBDC) to prevent major disruptions to its financial system.
The country’s banking regulator said the decision is coming on the heels of completing a research stage into the CBDC launch. BOT stated that while CBDCs offer myriad benefits, there are still major pitfalls that could adversely affect the local economy.
“In this consideration, the Bank of Tanzania has adopted a phased, cautious, and risk-based approach to [the] adoption of CBDC,” the public notice read. “Upon conclusion of the research phase, the Bank will provide information to the general public on the way forward, which may include a roadmap for transition to adoption of CBDCs.”
In 2021, the central bank began preliminary work on CBDCs by forming a multidisciplinary technical team. It made CBDCs and digital assets the central theme of its 20th Conference of Financial Institutions.
Throughout 2022, the central bank has organized several consultative forums with institutions like the Committee of Central Bank Governors, the Association of African Central Banks, and other private firms specializing in providing technical support for CBDCs.
By the end of the consultative process, the Tanzanian central bank noted that while over 100 countries were exploring CBDCs, only 13 nations were at the pilot stages of their development, with three being launched. The banking regulator noted that six nations had pulled out of CBDC explorations “due to structural and technological challenges in the implementation phase.”
“Analysis of these findings indicate that the majority of central bankers across the world have taken a cautionary approach in the CBDC implementation roadmap, in order to avoid any potential risks that can disrupt the financial stability of their economies,” the BOT said.
