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Tanzania prepares to launch its own central bank digital currency

A CBDC is a legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.

By: Tech Desk | Pune |
Updated: November 29, 2021 4:34:03 pm
bitcoin, bitcoin price, bitcoin price todayIllustrative bitcoin tokens in the window of a cryptocurrency exchange kiosk in Istanbul, Turkey, on Monday, Nov. 8, 2021. (Bloomberg)

Tanzania’s central bank will be launching its own digital currency soon. Governor Florens Luoga revealed the news at the central bank-organised “20th Conference of Financial Institutions (COFI)” on Thursday.

Luoga said, as quoted by Bloomberg, “the Bank of Tanzania has already begun preparations to have its own Central Bank Digital Currencies (CBDCs)  to ensure that the country is not left behind the adoption of CBDCs.”

A CBDC is a legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.

This development comes after Nigeria rolled out its own CBDC. In late October, Nigeria launched its CBDC — the eNaira. In doing so, it joined the Bahamas and five islands in the East Caribbean as the only economies to have introduced CBDCs. This is a short list, but one that is likely to be supplemented. CBDC pilot projects are underway in at least 17 other countries.

As of 2019, cryptocurrencies are largely banned in Tanzania after the country’s central bank said the digital assets were not recognized by local law. For Nigeria, the country’s central bank banned financial institutions from providing services to crypto exchanges. Following the ban, peer-to-peer transactions account for the bulk of Nigeria’s crypto trading activity.

In India, the Reserve Bank of India (RBI) had said central banks are exploring DLT (Distributed Ledger Technology) for application in improving financial market infrastructure, and considering it as a potential technological solution in implementing CBDC.

Meanwhile, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is listed for introduction in Parliament’s Winter Session which seeks to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India”. The Bill “seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.

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