Why central bank maintains caution on crypto currencies

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Why central bank maintains caution on crypto currencies
Why central bank maintains caution on crypto currencies

Africa-Press – Rwanda. Despite the growing popularity of decentralised crypto currencies across the world and being dubbed as the ‘next big thing’ the central bank is yet to change its stance which cautions Rwandans against engaging their trade.

While it is not illegal to use crypto-currencies in Rwanda, there are no provisions within the local financial structure that facilitate trading in crypto-currencies.

In recent months, there has been growing popularity of decentralized cryptocurrencies such as Bitcoin and Ethereum, which are not regulated by any governments and central banks.

Central Bank Governor John Rwangombwa recently noted that their stance has not yet changed saying that they advise Rwandans to refrain from decentralized cryptocurrencies as they are not accepted in the financial system and not supervised by any entity.

However, he said that it is not illegal for those who buy and sell externally in other jurisdictions. “We have been advising people to refrain from it, there is no where you can legally trade with it or forex. But if you are able to buy and sell it externally, that is up to you,” he said.

He said that among the reasons they have been calling for caution include the uncertainties present as well as vulnerability to fraud. “There are also a lot of uncertainties and at times fraud that lead us to ask people to exercise caution as when getting involved. While there is no major issue that we have seen or noted for us to start fighting crypto currency, we call on Rwandans to refrain from them,” he said.

The central bank is still studying the possibilities of issuing its own Central Bank Digital Currency in response to global trends in digital currency.

The study involves economic, financial and technology aspects related to Central Bank Digital Currency as well as the operationalization model, taking into account the local context.

A central bank digital currency (CBDC) is a digital currency that would be issued and overseen by a country’s central bank. Digital currency represents any currency or money that is managed or exchanged on digital computer systems, especially over the internet and never converted into physical form at any point.

“We are still conducting studies to understand it better, understand the benefits as well as the prerequisites to have it in the local market,” he said.

Rwandans who trade in decentralised crypto currencies told The New Times that while local financial institutions are not integrated to trade differently with digital currencies, they often go through financial institutions outside the country to receive proceeds of their trade.

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