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The Central Bank of Uganda (BoU) has initiated an investigation into the possibility of creating a virtual currency. Meanwhile, an official within the organization has warned that the country’s national bank must be clear on why it chose to have an electronic currency first before developing one.
Money Transfer Will Become Faster
The nation’s central bank is said to have launched an investigation into the possibility of creating a virtual currency for usage by families and companies. Furthermore, the BoU aims to alter the country’s financial legislation, and this action would allow the Bank Of Uganda to accept a virtual currency officially.
As shown in a recent report, the central bank’s decision is welcomed by advocates of Central Bank Digital Currency. They argue that such an electronic currency will allow Ugandans to transfer money more easily and at a lower cost.
However, Charles Abuka, the BoU’s executive director in charge of operations, stressed in a recent speech that the central bank must be explicit as to why it intends to create the Central Bank Digital Currency at first. He stated:
The first step is to articulate the justification of why we need it adequately, and what difficulties it will assist us to overcome.” Abuka further claimed that the adoption of Central Bank Digital Currency will have “technological ramifications.” He stated that the technical architecture to operate such an electronic currency would be expensive, and the country’s bank needs to know how this will affect the economy. He also mentioned that digital currency might be vulnerable to cyber-attacks.
The Digital Currency Makes It Possible For The Nation’s Bank to Track Funds
Despite the reservations of the BoU, Noah Baalessanv, a blockchain expert in Uganda, believes that a virtual currency will help the national bank to have a better understanding of the “real world economy.” Baalessanv went on to say that, besides a money economy, which is extremely costly to operate and not so clear, a Digital Currency puts the national bank in a situation to trace transactions.
However, the blockchain analyst warned that issuing a virtual currency would likely result in the removal of financial institutions from the monetary equation. While releasing digital money directly to consumers is more efficient, it is also the “most risky” aspect of a virtual currency, stated Baalessanv.
Most countries have released digital currencies already, and China has already begun wide usage of the currencies by taking advantage of the 2022 Olympics held in Berlin. The United States Of America, a world power, is still slow on its CBDC adoption.
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