The Bank of Tanzania has been researching the introduction of a Central Bank Digital Currency (CBDC) since 2021, and has since formed a multidisciplinary technical team to explore the risks and benefits of CBDCs.
The team has studied different types of CBDCs, models for issuance and management, and whether the currency should be token-based or account-based.
However, the Bank of Tanzania has identified several challenges that could impact the implementation of a CBDC.
These challenges include high implementation costs, dominance of cash, inefficient payment systems, and the risk of disrupting the existing financial ecosystem.
Additionally, some countries have publicly canceled or moved away from CBDC adoption plans due to structural and technological issues.
At this stage, the Bank of Tanzania is still considering the introduction of a CBDC, but will be taking a “phased, cautious and risk-based approach.”
The team is currently researching the risks and controls associated with the issuance, distribution, counterfeiting and usage of the currency.
The bank will continue to research and collaborate with other Central Banks and stakeholders in order to find the best technology and use for issuing the Tanzanian shilling in digital form.
No timeline has been given for when a decision will be made.
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