The Bank National Rwanda (BNR) has initiated a public consultation on its recently concluded feasibility study regarding the implementation of a retail central bank digital currency (CBDC). This move reflects the BNR's contemplation of introducing a national digital currency designed to leverage cutting-edge technological advancements and align closely with Rwanda's unique circumstances.
Driven by the objective of fostering a cashless economy and bolstering the resilience of the financial system, particularly in light of frequent power disruptions, the Central Bank of Rwanda has identified a retail CBDC as a strategic instrument. Despite the central bank's aspiration for a cashless society, substantial financial resources, estimated at $35 million over five years, are currently allocated to the printing and maintenance of cash reserves.
The proposed CBDC model put forth by the BNR entails the establishment of an interest-free intermediary currency. This currency, contingent upon suitable revisions to the country's Central Bank Act, would integrate seamlessly with existing payment infrastructures and potentially with other CBDCs. Embracing a token-based framework over an account-based one, the envisioned CBDC is envisioned to be programmable, facilitating open programmability and the execution of smart contracts. Tokenization enables offline digital cash transfers through technologies like Bluetooth or Near Field Communication (NFC), rendering smartphone dependency unnecessary, a departure from existing electronic payment modalities.
Notably, the study underscores the merits of open programmability, foreseeing its potential to stimulate innovation and the development of value-added products and services, despite potential concerns regarding privacy and security. While acknowledging the advantages of programmability, the BNR envisions the CBDC to offer only partial anonymity, addressing the need for greater financial inclusion and a formalized economy. The study also contemplates the imposition of user fees and holding limits, albeit without specifying the finer details, underscoring the importance of public acceptance and usability in CBDC adoption. Additionally, in its pursuit of reliability, the BNR favors a distributed database model over a distributed ledger, drawing insights from the CBDC policymaker toolkit developed by the World Economic Forum.
