HUSTLE MAG MARCH 2020 FINAL

ital dollar. The move could herald a new
chapter in the global economy.
Analysts think that the chairman’s
warming up to digital currency was largely
a response to China’s Digital Yuan, Facebook’s
Libra, and Public Payments Ledger
now common in China. He, however, stated
that whilst “a ledger where you know
everybody’s payments” is widely used in
China, he believes that it would not be
appealing in the US.
China recently made a surprise policy
shift especially when its economic planning
agency removed cryptocurrency mining
(a process for verifying cryptocurrency
and adding them to the blockchain digital
ledger for trading) from a list of activities
considered illegal in the country. They are
perhaps setting stage to lead the world in
this emerging technology.
There is, however, uncertainty whether
launching a digital dollar would guarantee
that the US dollar retains its central role in
the US and the world’s financial system.
Powell said that, “having a single
government currency at the heart of the
financial system is something that has
served the US well,” while emphasizing
that “preserving the centrality of a central
widely accepted currency that is accepted
and trusted is an enormously important
thing.”
In the United Kingdom, the Bank of
England has stated that it wants to create
a central bank-issued digital currency but
they first want to understand its implications.
In Africa, Tunisia and Senegal issued
a blockchain-based national currency, the
eDinar and eCFA respectively. These digital
currencies are being used along with
the regular currencies. Plans are under
way to expand the eCFA to other West
African states.
Although the European Union is reluctant
to issue a digital Euro and the US has
hitherto been indecisive, paper currency is
slowly becoming obsolete. The convenience
of digital currencies is such that
there is absolutely nothing anyone can do
to slow their spread in society.
The attractiveness of digital currencies
is not just convenience. They present a
strong value proposition to especially
emerging economies.
The short history of digital currency in
Kenya is perhaps known for its inclusiveness.
Access to finance has become more
widespread. Few people today visit banks.
As a result, many banks branches are
closing.
Digital currencies especially in digital
mobile lending in its present formats are
expensive. Like in any commodity with
limited supply their price will plummet
if more players join the market. A stable
coin will change the dynamics and force
banks to move into digital lending for
greater inclusivity.
As the old English idiom says, “the proof
of the pudding is in the eating.” We can
only understand the implication of this
emerging currency phenomenon if we
tried it. Just as we did with M-Pesa.
The writer is an associate professor at
University of Nairobi’s School of Business.
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