Central Bank Of Tanzania Plans to Launch Central Bank Digital Currency
According to a report, Tanzania is looking into a Central Bank Digital Currency (CBDC). In October, Nigeria became the first African nation to launch CBDC called eNaira, and other African countries have since then announced similar plans.
Bloomberg reported that the Bank of Tanzania Governor Florens Luoga has officially announced the country’s CBDC plans at the 20th Conference of Financial Institutions (COFI). Luoga said:
“To ensure that our country is not left behind the adoption of central bank digital currencies, the Bank of Tanzania has already begun preparations to have its own CBDC.”
The governor also revealed that the central bank is also looking to expand research into digital currencies and strengthen the capacity of its team.
The move was inspired by Nigeria’s launch of its own CBDC, the eNaira, last month. Nigeria partnered with a German FinTech to launch a digital currency to complement the physical naira. The nation is the second to officially have a CBDC after the Bahamas’ Sand Dollar, which launched last year.
According to Luoga the central bank is planning to diversify its foreign exchange reserves. To this end, it will buy gold from local refineries. “The monetary gold that we plan to buy should have a purity of not less than 99.5%,” he said. He also expects the country’s inflation rate to remain within the targeted range of 3% to 5% in 2021-22.
However, the central bank is still cautious about cryptocurrencies. And the governor reminded the public about illegal status of cryptocurrency in the country, urging them to be wary of investing.
Since 2019, cryptocurrencies have been banned in Tanzania after the central bank said they were not recognized by law. However, this may soon change as the Bank of Tanzania is reportedly working to reverse this ban. This development is a result of the Tanzanian President Samia Suluhu Hassan asking the central bank to prepare for cryptocurrencies shortly after she became president.
CBDCs In Africa
More and more governments have become interested in exploring a central bank digital currencies in their countries, and in Africa, CBDC adoption is gradually growing.
Nigeria was the first African country to launch its CBDC. Other African countries are also researching potential opportunities that CBCDs provide for their economies.
According to Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), over 110 countries are at some stage of exploring CBDCs.
The Bank of Ghana has said it will soon launch its CBDC. While other countries like South Africa, Zimbabwe, and Namibia are still exploring the technology’s feasibility.
