World Bank raises concern over use of bitcoin

The World Bank has raised concerns over the rising use of bitcoin noting that it poses a major risk to the established global financial system.

World Bank Senior Vice President Mahmud Mohieldin says bitcoin has many similarities with a fraud scheme and is urging regulators to be cautious when approving the use of the currencies.

Central Bank governor Patrick Njoroge said the bank is studying digital currencies to see how they are impacting on the local financial system.

The meteoric rise of digital currencies like bitcoins and erethium has caught regulators in the world flat-footed, leaving them in an awkward situation, adopt or ban them.

Mohieldin has said there is a strong case for authorities to rein in digital currencies because their links to the established financial system could cause disruptions.

Mohieldin says governance and risk management will be critical for crypto-currencies.

In Kenya, the crypto currency market is valued at close to 165 billion shillings and growing fast.

This has forced the government to form a team to look into the impact digital currency on the conventional financial system.

These are concerns shared by National Bank of Rwanda governor John Rwangombwa. Dr. Patrick Njoroge says the central bank will encourage the growth of financial technology as long as they complement the established financial system.

Financial inclusion in Kenya is at 75 percent of the population helped by digital innovations.

  

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