The Central Bank of Tanzania has stated that it is still contemplating the introduction of a central bank digital currency (CBDC), but that it will take a “gradual, cautious and risk-based approach” to doing so. This is because the bank has recognized a number of obstacles that may prevent its successful implementation.

Since its declaration in 2021 about the possibility of a CBDC deployment, the East African nation of Tanzania has organized a multidisciplinary technical team to investigate the risks and benefits of CBDCs, as stated in a public notice issued by the Bank of Tanzania. on January 14.

The bank said that its team has been investigating various forms of CBDC, issuance and management strategies, and the question of whether its CBDC should be token-based or account-based.

The results of the research conducted up to this point have shown that more than one hundred countries around the world are currently in various stages of the CBDC adoption process. Of these countries, 88 are in the research stage, 20 in the proof of concept stage, 13 in the pilot stage, and 3 in the launch stage.

The central bank took note of the fact that at least four nations, namely Denmark, Japan, Ecuador, and Finland, have publicly canceled plans to adopt CBDC, and that another six nations have moved away from digital currencies as a result of the structure. and technological challenges that are present in the implementation phase.

According to the bank, some of these issues were high implementation costs, the dominance of cash, inefficient payment methods, and the danger of disrupting the current ecosystem. The risks and restrictions that are linked to the issuance, distribution, counterfeiting and use of coins are one of the most important areas that the team is looking at at the moment.

Analysis of this data indicates that the majority of central bankers around the world have taken a cautious approach in the CBDC implementation plan. This is likely to be done to avoid potential risks that could disrupt the financial stability of their economies.