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Is CBDC the new plan for the Bank of Uganda?

The CBDCs are in trend and are considered as the future currency. The Ugandan central bank is said to have started looking into the possibility of issuing a CBDC for use by individuals and businesses. The BOU is rumoured to be interested in revising the country’s financial legislation. The possibility of CBDC being legally adopted by the BOU is high.

According to the report, CBDCs can really be helpful for the Ugandan Banking system. The report also claims that such a digital currency will allow Ugandans to move money more cheaply and quickly. Nonetheless, Charles Abuka, the bank’s executive director of operations, said in a recent interview that the BOU must be clear about why it wants to launch the CBDC in the first place.

Abuka also believes that issuance of CBDC can also have “technical consequences,”. According to him, the technological architecture of such a digital currency will come at a cost, and the central bank must comprehend the charges’ ramifications. He also mentioned that digital currency could be vulnerable to hacking.

Despite the BOU’s concerns, Noah Baalessanv, a blockchain consultant and one of Uganda’s digital currency proponents, claims that a CBDC will allow the central bank to get a sense of the “actual economy.” Baalessanv also claims that, unlike a cash economy, which is expensive to maintain and opaque, a CBDC will allow the central bank to trace transactions.

However, the blockchain analyst cautioned that issuing a CBDC is likely to remove financial institutions from the banking equation. While distributing digital currency directly to users is more efficient, Baalessanv believes it is also the CBDC’s “most harmful” feature.

Hmm, can we come to the conclusion that the Bank of Uganda will release its digital currency soon? Let us just wait and watch. Wrap!

Related: Philippines is all set for CBDC implementation

Kunal Krishan
Kunal is an investment space writer who firmly believes investment is something which should not be a choice but a part of everyone's life.
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