Rwanda Develops CBDC to Avoid Falling Behind, Central Bank Deputy Governor Says

Rwanda is contemplating launching a Central Bank Digital Currency (CBDC) because it does not want to be left behind and to prevent any hindrances to trade between the African country and its major trading partners. According to a deputy governor with the National Bank of Rwanda, the country should be prepared for digital currencies being developed by its respective trading partners.

The Cost of Not Developing a CBDC

Rwanda is actively working on launching its central bank digital currency (CBDC), partly to align with its major trading partners who are also exploring digital currencies. According to Soraya Hakuziyaremenye, the Deputy Governor of the National Bank of Rwanda (NBR), the Rwandan apex bank aims to prevent any hindrance to trade between the African country and its trade partners due to a lack of digital currency.

During an interview with a local media outlet, Hakuziyaremenye emphasized that if Rwandan companies face difficulties trading without a CBDC, this could adversely affect the private sector in both Rwanda and its trading partners. Additionally, Hakuziyaremenye highlighted the importance of Rwanda being prepared to accept other countries’ digital currencies.

“There is also an imperative for the Central Bank to make sure that we are ready for innovations that are also experimented in other countries where we have trading relations and partnership so that we are not at the tail end of that of such developments,” Hakuziyaremenye said.

NBR to Begin CBDC Proof-of-Concept

As previously reported by Bitcoin.com News, the Rwandese central bank initiated its CBDC feasibility study in June 2021. In May of this year, the central bank published a research paper that proposed a two-tier CBDC model with zero interest and “partial pseudo-anonymity.” The paper also emphasized the importance of ensuring the digital currency’s interoperability with payment systems and other CBDCs.

Meanwhile, in the same interview, Hakuziyaremenye acknowledged that while there is optimism about the CBDC in Rwanda, many prospective users have raised privacy and security concerns. The deputy governor added that the NBR’s research showed potential risks, especially around the financial system’s stability.

Still, despite these findings, the NBR deputy governor said the central bank is committed to launching the CBDC. She also said that residents still have approximately four weeks to share their thoughts on the local currency’s digital equivalent. Once the consultation phase is closed, the NBR will proceed to “embark on a proof of concept,” Hakuziyaremenye added.

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