Economists and captains in the technology sector are calling on government to move with the tide and embrace cryptocurrencies which are constantly innovating and providing solutions in sectors such as finance.
The experts say that investments in research will help to build knowledge on blockchain technology rather than simply dismissing it altogether.
“We are talking about inter-operability of technologies, when it is created here it can be accessed elsewhere; we should be part of the change or we will be left behind,” said Teddy Kaberuka, an economic consultant.
He called on the private sector to take the lead in investing in cryptocurrency in order to speed up regulation.
“There is that trade off on whether to start with regulation or innovation; the challenge is that we don’t have local private sector investing in cryptocurrencies which is a purely private sector driven trend,” he said.
Cryptocurrencies are a form of digital currency developed by programmers using cryptography. They are decentralised in nature because they are built on blockchain technology, which is managed by a peer-to-peer network.
Although the National Bank of Rwanda has been largely quiet and often dismissive about cryptocurrencies because of their very nature of being decentralised and being driven by speculation, which makes them volatile and risky, its tone is slowly changing with the bank now considering issuing its own digital currency.
The bank recently announced that it is learning from research done by its peers including the Royal Bank of Canada, De Nederlandsche Bank, the Monetary Authority of Singapore and the South African Reserve Bank on how to go about issuing its own digital currency.
“We want to learn from our peers that have gone ahead of us; we believe that digitising currencies has the potential to bring efficiencies and speed up transactions; we see an opportunity in that,” said the director-general of financial stability at the Central Bank Peace Uwase Masozera.
“But in terms of technology it is still young and developing that is why we are cautious about not jumping in quickly.”
When asked what value digital currencies will add to the country’s financial system, she said efficiencies.
“Think about the physical process that you have to go through printing cash and transporting it, it is tedious, expensive, and takes long. If you digitise that there is potential gain, but we cannot overlook the fact that it is running on technology which comes with risks including cyber risks which brings the question on how do you protect yourself as well as the economy,” said Ms Uwase.
Beyond transactions and payments, cryptocurrencies are also a tradable instrument, just like the capital markets.
“The fact that cryptocurrencies are money, this automatically makes them an economic matter that should be regulated by government,” said Clement Uwajeneza, a technology expert.
“The hot debate about cryptocurrencies is not about technology but the fact that they are traded, the conversation on how they can add value to the economy in one way or the other is very important.”
He added that it would be prudent if the focus is put on the business models around digital currencies, looking at those with use cases that come with solutions.
“Some 90 per cent of the money transacted is already digital through credit cards and other forms which costs money, banks use a lot of money to settle transactions.”