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Economy

Njoroge opposes Facebook plans for digital currency

Patrick Njoroge
CBK Governor Patrick Njoroge. FILE PHOTO | NM,G 

Central Bank of Kenya (CBK) has joined growing global voices against Facebook’s plan to launch a digital currency next year.

Kenya’s financial services regulator says it’s “miles away” from allowing the use of virtual money, popularly known as cryptocurrency, as a legal tender.

Facebook, the global social media giant, roiled financial regulators around the world on June 18 when it announced plans to launch a digital coin to be called Libra next year.

The shock move has been sharply opposed by central banks globally, including the Federal Reserve of the US, who fear the adoption of the social media’s currency by its more than 2.3 billion users could disrupt the global financial system.

“We are still miles away from having solutions to those things (cryptocurrency). But I know there’s a lot of interest particularly with the new product that Facebook has recently announced,” CBK Governor Patrick Njoroge said.

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“That actually is miles away from any regulation, including the Fed (central bank of the US) which just recently said (Facebook’s cryptocurrency plan) needs to be paused. The risks are phenomenal and we need to understand the risks better before making a statement.”

Dr Njoroge said Kenya has been in touch with global counterparts under Switzerland-based Bank for International Settlements (BIS) — bank of central banks — and the G20 Finance Ministers and Central Bank Governors Meeting where Kenya is occasionally invited as a guest.

“We collaborate with other central banks in the world. So in those sort of fora, we are working with other central banks to deal with regulations of cryptocurrency,” the CBK chief said.

Concerns have been raised over the possible risks posed by Libra to data privacy, consumer protection and money laundering controls.

Facebook has been on the defence amid a backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 US presidential election. Dr Njoroge has since 2017 made his position clear on the use of digital currency such as bitcoin to settle transactions, terming the trade “dangerous”.

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