The Central Bank of Kenya has announced an ambitious plan to switch to Bitcoin as a blanket move to solve thousands of problems facing the country.
Noting that systemic fiscal and monetary challenges had made it hard for Kenya to develop, Central Bank Governor Patrick Njoroge said that using Bitcoin would help cushion Kenya from a volatile shilling, shortage of foreign currency reserves, increase velocity of money and shield Kenya from exploitative loans that threaten the sovereignty of Kenya.
“Our decision to shift to Bitcoin is both tactical and logical. Our currency has always been the punching bag for the International Monetary Fund which always claims that the Kenya shilling is overvalued. This has led to too much pressure on the Kenyan Shilling and this has a negative effect on the economy. We are losing too much simply because someone at IMF woke up on the wrong side of the bed. Bitcoin will put an end to this.”
The Governor also added that with the sharp increase in national debt that is foreign currency denominated, using Bitcoin would help shield Kenya from Forex exchange losses and will even lower Kenya’s national debt as Bitcoin appreciates. It will also help Kenya play cat and mouse game with its lenders since Kenya will be able to hide its incomes, a tactic that developed countries have always used.
The move cements Kenya’s position as a leader in financial technology, with the country being the world leader in use of mobile money. “It should be easy for Kenyans to switch to Bitcoin and other digital currencies because they are already used to cashless transactions.”
Experts now predict that Kenya’s move could be replicated by other countries. Leading economist and poverty consultant Mihr Thakr says that poor countries could use Bitcoin both as a source of revenue and also to make a statement against oppressive financial systems that seem to favor the developed world at the expense of poor countries.
“The hype over digital currencies has been at an all time high and large institutions such as Tesla are also getting in on the craze. However, no one expected that a government would dive in headfirst and the move by the government of Kenya has taken the cryptocurrency world by surprise. We expect more governments to follow but Kenya is already a step ahead of everyone else.”
Others warned that Kenya was likely to face the wrath of world system, but can withstand the pressure if they get the backing of Bitcoin users.