Discussion Paper on CBDC in Kenya

You can find a reference to the official CBDC discussion paper by the Central Bank of Kenya here

Core features of a digital currency

  1. Ease of use
  2. Low transaction cost
  3. Convertibility
  4. Instant settlement
  5. Continuous availability
  6. High degree of security
  7. Resilience
  8. Flexibility
  9. Safety

Why Central Banks are looking at CBDCs

  1. Dwindling use of their physical currencies for digital currencies
  2. Looking for more effecient ways to issue currency compared to physical currency
  3. Issue an alternative to private digital currencies that may pose a damage to the economy

Cross-border remittance costs are meant to hit the SDG target of 3%. In the East African Community, it is at 8.2%. In Kenya, it is at 8%.

The East African Payment System allows banks in Kenya, Rwanda, Tanzania and Uganda to transfer money across the borders.

Idea: Instead of getting detailed information about a personal, you only get access to what is relevant to you and let the user take full control and responsibility for their data.

Twitter Space Notes

  1. Transparency when using a CBDC
    • Because of the transparency, we are audit transactions of politicians joining office
    • We can use the open data to track people's spending and provide loans based on their creditworthiness
    • However, the Central Bank will be able to track you
    • Thought: If you think that privacy is a problem, Mpesa has all your transactions and it can block your account with ease
  2. Could undermine the banking sector
    • If the CBDC becomes retail, the banking sector will be undermined as most people will bank with the Central Bank
    • The banks will be illiquid and will not give loans to people easily to people


  1. Build a test distributed ledger to simulate Central Bank Digital Currency