The National Bank of Rwanda Governor, John Rwangombwa, recently revealed that the country is actively working on the development of a central bank digital currency (CBDC), according to Rwandan national media The New Times. He made this announcement while presenting the central bank's annual report for the financial year 2022/2023 to Parliament on November 27.

CBDC, a digital form of currency regulated by a central bank, offers a secure store of value and an efficient means of payment, according to the International Monetary Fund (IMF). MP Pie Nizeyimana inquired about the progress made on the study initiated by the central bank to explore the potential use and benefits of a digital currency in Rwanda.

Rwangombwa confirmed that the first study on CBDC has been completed, indicating that it is both relevant and necessary. The central bank has engaged with financial institutions and public entities to discuss the implementation of a digital currency, and a report has been submitted to the government for deliberation at the cabinet level before involving the general public.

The Governor explained that a trial phase will follow, during which the implementation process and technology to be used will be determined. He estimates that this ongoing process could take approximately two years before the issuance of a CBDC for public use. In the meantime, Rwanda plans to learn from the experiences of other international entities that are already ahead in their digital currency development efforts.

Earlier in 2022, the National Bank of Rwanda Deputy Governor Soraya Hakuziyaremye stated that Rwanda's position on the use of digital currency would be made known by the end of the same year. The country aimed to conclude research by December 2022, examining the feasibility of issuing a CBDC.

According to a Bank for International Settlements (BIS) survey conducted in 2022, 93 percent of surveyed central banks are currently engaged in CBDC work, with more than half running concrete experiments or pilot projects. The survey indicates that as progress is made, central banks' uncertainty regarding short-term CBDC issuance is diminishing.

Rwanda's progress in developing a central bank digital currency (CBDC) positions it as one of the frontrunners among African nations to launch such a currency. As Rwanda continues its efforts to implement a CBDC, it follows in the footsteps of a few other countries like the Bahamas, Jamaica, and Nigeria, which have already launched their own digital currencies. Notably, China's CBDC pilot program, currently being tested in various scenarios, has reached an unprecedented scale, covering 260 million individuals. Rwanda's active involvement in CBDC development highlights its commitment to embracing digital innovation in the financial sector.

However, the Rwandan government maintains a cautious stance on the use of cryptocurrencies within the country. Governor Rwangombwa advises the public against engaging in cryptocurrency transactions due to the potential for significant financial losses that some individuals have experienced.

The National Bank of Rwanda Governor, John Rwangombwa Image source: The New Times