"Bank of Uganda is currently doing preliminary studies on whether or not a central bank digital currency should be considered ... and especially explore what policy objectives it would address," Andrew Kawere, the bank's director for national payments, told Reuters in an interview.
"Is it financial inclusion that we want to solve, is it payments, is it to support innovations in the financial space? That is an unanswered question."
African governments have approached digital currencies differently. Nigeria's central bank barred local banks from working with cryptocurrencies last year before launching its own digital currency, while Central African Republic last month adopted bitcoin as an official currency, an African first
Kawere said they had no timeline for concluding their studies or issuing a digital currency, but said they were particularly focusing on risks around the technology.
"Consumer protection - this is a very big concern for us as Bank of Uganda. In Uganda we have low levels of digital financial literacy ... the population needs a bit of protection from some of these fairly advanced financial innovations."
Kawere said access would also be an issue when rolling out such a currency because of the low levels of penetration by the necessary infrastructure like smart phones, computers and the internet.
"It could lead to financial exclusion for those that can't have access (to the currency)."
He said the bank had reservations about cryptocurrencies' volatility which he said undermines their ability to function as a store of value.
Cryptocurrencies were already informally in use in Uganda, Kawere said, but the central bank has cautioned licensed payments service providers to go slow on them while the regulator studies the technology and develops regulatory mechanisms.
Ugandans have received cryptocurrency worth the equivalent of about $4.8 billion between March 2019 and March 2022, according to blockchain data platform Chainalysis.
"So Bank of Uganda hasn't banned cryptocurrency, we have simply applied some speed brakes," Kawere said.
The Bank of Japan currently has no plan to issue its own digital currency but will prepare "thoroughly" to respond to changing circumstances that could require it to do so in future, Governor Haruhiko Kuroda said on Tuesday.
6 months, 1 week ago
The government is set to introduce a bill to ban private cryptocurrencies and create a framework for an official digital currency to be issued by the Reserve Bank of India (RBI) during Parliament’s Winter Session starting November 29.
10 months, 2 weeks ago
The hearing, "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States," is the latest from Congress to explore the issues concerning crypto assets.
10 months ago