Rwanda to Launch Its Central Bank Digital Currency in 2026

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As a researcher with a background in finance and economics, I am excited about Rwanda’s decision to create its own Central Bank Digital Currency (CBDC), the digital franc. Having followed the global trend of CBDC development, I understand the potential benefits that this move could bring to Rwanda, particularly in enhancing financial inclusion and economic competitiveness.

In the coming two years, the Central Bank of Rwanda, headed by the National Bank of Rwanda (BNR), intends to launch its own Digital Currency, also known as Central Bank Digital Currency (CBDC). This initiative is designed to enhance Rwanda’s financial infrastructure, provide a secure, cost-effective, and accessible alternative to traditional cash for citizens, and extend the reach of banking services to a larger population.

Driving Force: Enhancing Financial Inclusion and Economic Competitiveness

Deputy Governor Soraya Hakuziyaremenye of the National Bank of Rwanda (BNR) shared with The New Times in an interview her plans for introducing a digital version of the Rwandan franc. This new development aims to expand financial accessibility, allowing the unbanked population to engage more effectively in the formal economic sector. In essence, she explained that just as people conduct transactions using physical currency, the Central Bank Digital Currency (CBDC) will serve an identical role.

The motivation behind the BNR’s plan to create a digital currency stems from the worldwide movement as numerous nations experiment with or have already introduced Central Bank Digital Currencies (CBDCs). Soraya pointed out that China, a significant trading ally of Rwanda, is currently in the testing phase for its digital yuan. She warned that potential economic consequences could arise if Rwanda’s trading partners adopt their digital currencies before Rwanda does. Additionally, she emphasized that several African countries like Ghana, Nigeria, and South Africa have initiated or are exploring the use of their digital currencies.

As a analyst, I’ve been tasked with ensuring the seamless introduction of the digital franc in Rwanda. To accomplish this, I collaborated closely with both the Ministry of Finance and the Ministry of ICT and Innovation. Together, we conducted an extensive feasibility study to evaluate the potential advantages of a Central Bank Digital Currency (CBDC) for Rwanda.

Cautious Steps: Addressing Potential Risks and Embracing Public Consultation

Although CBDCs hold great promise, Soraya disclosed that they are proceeding with caution. This approach necessitates a cabinet meeting to acknowledge the inherent risks. Several key concerns, including insufficient adoption, data security, robustness of the system, and potential impact on financial stability, are being addressed through a public consultation phase. The deputy governor made this statement.

“Instead of introducing a national digital currency as an end in itself, we prefer developing a Central Bank Digital Currency (CBDC) that brings advantages to the people of Rwanda.”

For the next four weeks, Rwandans have the opportunity to provide input during the public consultation on the proposed Central Bank Digital Currency (CBDC). Following this period, the country will transition to a proof of concept phase, evaluating the practicality and viability of implementing the CBDC.

As a researcher, I would explain it this way: “I propose that we conduct a preliminary trial of the technology, design, and speed on a limited scale. This approach will enable us to evaluate its performance and make necessary improvements. However, if our objective is to assess the technology’s application in other countries, specifically for cross-border payments, then this process is expected to last approximately six months.”

A limited group of people and businesses will undergo testing to ensure the digital franc, Rwanda’s new digital currency, functions seamlessly. If these tests yield favorable results and risks are adequately managed, the digital franc could be introduced in the market within the next two years.

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2024-06-03 13:03