Kampala- The Bank of Uganda governor Emmauel Tumusiime Mutebile has warned against cryptocurrencies, saying they cannot match a well managed national currency.
Mr Mutebile was speaking during the Africa Blockchain conference in Kampala yesterday.
“Crytopcurrencies do not have the privileges of a legal tender and are not backed by the Central Bank which ensures that supply of currency is always adequate to meet the demand,” he said.
The warning comes amid a rapid growth in crytopcurrencies, which the Central Bank has said they have no sufficient technology to regulate them.
“There are no mechanisms to back up cryptocurrencies to ensure they have stable value. They are subject to extreme price volatility which renders them ineffective as a store of value,” Mr Mutebile said.
The two-day Blockchain conference will discuss how Uganda can leverage on technology to improve the country’s payment system.
Earlier in the week, Mr Kwame Rugunda, the chairman of the Uganda Blockchain Association, told Daily Monitor that the mobile money revolution was not sufficient to improve Uganda’s payment system and financial inclusion thus the country should tap into new technology .
Mr Muteble said the governor of the Bank of England, Mark Carney, had recently noted that the average volatility of the top 10 cryptocurrencies was high, which therefore have made them command a negligible share of the e-commerce payment platform worldwide.
Cryptocurrencies, he said, allow anonymous cross border payments, which facilitate illicit payments such as money laundering and financing of crime.
Mr Mutebile also said the value of cryptocurrencies depends entirely on subjective beliefs of traders with speculators funning the future.
“In the long term, unless cryptocurrencies command widespread acceptance as a medium of exchange, demand for them will be negligible,” he said.
However, Prof Bitange Ndemo, the chairman of the Kenya Blockchain Taskforce, said blockchain technology will improve government efficiency such as facilitating drug supply, tax collection and enterprise development, among others.
“We have to leverage emerging technology to create massive jobs for the young people. Nobody is going develop Africa. Africa can only be developed by the Africans,” he said.