2 January 2018

East Africa: EAC Wary of Surrogate Coins

EAST African Community (EAC) member states are moving to adopting a regional single currency with caution over growing adoption of cryptocurrencies or digital designed currencies, including the famous Bitcoin, the 'Daily News' can establish.

In translating its dream into reality, the EAC Partner States aim to harmonise monetary and fiscal policies, financial, payment and settlement systems. Other areas include the need to harmonise financial accounting and reporting practices; harmonise policies and standards on statistical information and establish an East African Central Bank.

The 'Daily News' contacted the Central Bank (BoT) management on the threat of growing use of digital currencies to the region's intention to have a single currency to be used across its six members -- Tanzania, Kenya, Uganda, South Sudan Rwanda and Burundi.

In response, Tanzania's Central Bank Director of NationalPayment System, Mr Bernard Dadi said the process leading to adoption of a single currency was still underway, albeit new challenges such as the growth of Bitcoin, one of the famous virtual currencies.

"The objective of Bitcoin founders is quite different from that of Community Member States on establishing a single currency. As we've said, the process to have a single currency is still underway with consideration of available challenges including the growth of Bitcoin," Mr Dadi responded.

The Central Bank of Kenya, says Mr Dadi, had since warned the people over increasing adoption of the cryptocurrencies including Bitcoin. According to the BoT official, Uganda is another EAC member state that has warned its people against the use of the Bitcoin.

"Not just in Kenya ... South Africa, Swaziland, Namibia, Uganda and other African nations have since warned their people over Bitcoin," he added. Public warning apart, the BoT has told the 'Daily News' that it would soon issue a policy directive on the usage of the cryptocurrency within Tanzania.

Prior to the issuing of highly anticipated policy directive, the official says that "... cryptocurrency experts from UK have already conducted workshops for BoT management and senior staff on these currencies." In addition, he says, the ongoing process covers approval of some recommendations resulting from workshops that covered Central Bank of Tanzania board members.

Climaxing in 2017, Bitcoin dropped sharply to $16,563 and then $12,191 close to Christmas Day, after having shot to as high as $19,000 on some exchange networks over the last quarter of last year. Data compiled by Bloomberg, an online platform that delivers business and markets news, data, analysis and video worldwide, shows that the Bitcoin dropped by almost 40 per cent.

According to the EAC website, co-operation in monetary and fiscal matters in order to establish monetary stability within the Community now aims at facilitating economic integration efforts and the attainment of sustainable economic development of the Community.

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