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Rwanda’s Feasibility Study on Central Bank Digital Currency
Rwanda is currently assessing the potential adoption of a central bank digital currency (CBDC) to enhance its financial landscape. The National Bank of Rwanda (BNR) has released a comprehensive feasibility report exploring the benefits, risks, and practicalities associated with implementing a retail CBDC.
Opportunities Identified by the Feasibility Study
- Increasing resilience against power or network outages
- Improving innovation and competition in the CBDC market
- Contributing to a cashless economy
- Developing faster, cheaper, and transparent international remittances
The BNR has highlighted four key “sweet spots” for the potential CBDC implementation, which offer significant advantages over other opportunities.
Challenges and Risks Associated with CBDC Adoption
While the feasibility study acknowledges the promising aspects of a CBDC, it also outlines challenges that need to be addressed. The risks associated with public adoption, financial service providers, and merchants are of particular concern.
Rwanda’s central bank emphasizes the importance of simplifying the concept of CBDC for the general public and ensuring a seamless user experience. It recognizes that the adoption of CBDC is a complex matter that requires careful consideration.
Proposed Solutions and Recommendations
To mitigate these challenges, the BNR recommends a token-based CBDC model with open programmability. Additionally, it suggests the implementation of an offline-capable CBDC that utilizes Bluetooth or Near Field Communication (NFC) technology to operate without internet connectivity.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
