Will Central bank approve blockchain use by Kenyan banks?

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Kenyan banks are seeking approval from the Central Bank of Kenya to use blockchain in their operations

This May, The Central Bank governor, Dr. Patrick Njoroge had acknowledged receipt of a number of applications from financial institutions seeking approval and licensing of blockchain technology linked products and services.

“A number of banks are currently working on products (and services) hinged on blockchain technology and we think that they offer a lot of promise,” Governor Njoroge was quoted saying.

The CBK bank supervision annual report 2017 says that banks that will embrace innovation and adopt new technologies will have unprecedented opportunities to change and improve how they provide financial services and products. At the same time, they must manage the risks created by the new digital economy 

Market regulators and players in the financial industry have in the recent past been exploring guidelines and regulations for blockchain technology and cryptocurrencies

The Kenya Blockchain task force recently okayed the technology saying that it will make operations seamless. The taskforce also mulled use of a local cryptocurrency . 

The minister of Finance, Henry Rotich is was also keen on blockchain as he said in July  that the ministry  does want to rush into a particular design of regulation which can kill the development of this technology because there are some positive things which are happening in this technology that they would want to adapt  
" Some countries like Estonia are using this technology in managing their finance. We need to see how best this can be to our economy. Sometimes regulation falls behind innovation. We

3on't want to place regulation before understanding the risks. If we didn't encourage MPESA, we wouldn't be seeing what is now."  The minister was quoted  adressing the   National Assembly Finance and Planning Committee  

A look at how Blockchain can disrupt Payments: 

  • By eliminating the need to rely on intermediaries to approve transactions between consumers, blockchain technology could facilitate faster payments at lower fees than banks.
  • Clearance and Settlement Systems: Blockchain technology and distributed ledgers can reduce operational costs and bring us closer to real-time transactions between financial institutions.
  • Securities: By tokenizing traditional securities such as stocks, bonds, and alternative assets, the blockchain is upending the structure of capital markets.
  • Loans and Credit: By removing the need for gatekeepers in the loan and credit industry, the blockchain can make it more secure to borrow money and provide lower interest rates.

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