Rwanda is looking to develop its own national Central Bank Digital Currency in the next two years, as part of the country's efforts to streamline its financial system and position itself as an important player in the future of the global economy.
First, I will start by going back to what a CBDC is and why we think the Rwandan digital franc is important for the local market. That started in 2022, and what we learned is that it was important as a central bank to understand not only the technology behind a CBDC, but also the potential risks that would come if we were to issue a digital currency.
Ours is a cautious approach and it would even require a cabinet decision because this is Rwanda's currency. We are mindful of our region. For instance, when we look at countries that have undertaken research or piloting, currently we have close to 86 countries that have formally started piloting or are at the same level with us in research.You must work closely with your trading partners, for instance, if you are to validate that cross-border payments will be faster, and cheaper, that our main trading partners also can receive CBDCs that have developed their own.
There are different options. Rwanda's preferred option is to have a retail CBDC. That means a CBDC that is distributed through banks the same way you can make deposits and have accounts with your bank. The majority indicate that that this would not only fast-track financial inclusion but also the population having access to digital financial services quicker.Other concerns raised include how the monetary policy is going to work and be transmitted if it's now in digital form. Others are adopted from financial institutions such as Banks.
One example is China, they are now in the pilot phase. But also, international communities like the European Union are set to launch its CBDC in 2025. We continue to attract major fintech firms including unicorns in Africa such as Flutterwave, and Chipper Cash among others. The sandbox has also been a bridge between the innovators and existing financial institutions, one example is SPENN and I&M bank in the digital payment space.
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