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Bank of Uganda warns public on online cryptocurrency

By John Odyek

Added 28th June 2019 08:47 AM

Dr. Louis Kasekende the deputy Governor at the Bank of Uganda has said there were no regulations on the use of online crypto currency and it is risky to start using them.

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Kasekende said Bank of Uganda does not regulate or supervise all financial institutions (File Photo)

Dr. Louis Kasekende the deputy Governor at the Bank of Uganda has said there were no regulations on the use of online crypto currency and it is risky to start using them.

FINANCE 
 
Bank of Uganda has warned the public against the use of online cryptocurrency.
 
Dr. Louis Kasekende the deputy Governor at the Bank of Uganda has said there were no regulations on the use of online cryptocurrency and it is risky to start using them. 
 
This was during a Town Hall meeting held at Masaka to engage the public on activities of the central bank. Cryptocurrency is a form of digital money; it is associated with the Internet using codes for purchases, transfers, and money online. The first cryptocurrency was bitcoin which was created in 2009, since then several of them have been created.
 
“Let me state clearly that the online cryptocurrency businesses are not regulated at the moment and therefore carry a significant risk of loss of savings, with no recourse to protection or insurance by government, like is the case with regulated financial institutions such as commercial banks,” Kasekende said.
 
Facebook recently announced the Libra, a new cryptocurrency targeting its two billion users around the world, which the company intends to launch next year.
 
Kasekende clarified that Bank of Uganda does not regulate or supervise all financial institutions. He said Bank of Uganda supervises commercial banks, credit Institutions and the micro-deposit taking institutions and the foreign exchange bureaus and money remittance services.
 
He noted that there was public concern relating to the Gross Domestic Product (GDP) growth figures and what some have called “the disconnect of the rosy picture painted by these figures from the common man’s reality”.
 
“The compilation and publication of official national statistics like GDP is the core responsibility of Uganda Bureau of Statistics. These GDP figures to an extent reveal the economic activities that are fastest growing or generating income and where you should look to participate and take advantage of the opportunities therein to earn a decent living,” he explained.
 
“GDP information reveals why some sections of the population might not be experiencing higher incomes relative to others. Such information can be deduced from sector breakdown of the GDP and other critical statistics like population growth rates and the employment patterns,” Kasekende said.
 
He announced that the construction of the Masaka currency centre was complete and is to be opened by President Yoweri Museveni soon.
 
“This magnificent new currency centre shall have the requisite capacity to serve the increasing and future demands of this economic hub. I believe, the new currency centre building adds to the skyline of this historic town and is befitting of a modern city, as Masaka Municipality aspires and duly deserves,” he said.
 
Commenting on the operationalisation of the Islamic banking model that was permitted by the enactment of the Financial Institutions (Amendment) Act, 2016 Kasekende said the Bank of Uganda is currently processing three applications that it has received from entities seeking to offer Islamic banking services.
 
He explained that one of these applicants, that currently offer traditional banking services in Uganda, seeks to open up an Islamic finance window while the other two applicants that are entities outside Uganda are interested in acquiring Islamic banking licenses.
 
“The Bank of Uganda is finalising consultations with the various stakeholders to establish the necessary Shariáh Advisory Council that shall oversee regulation and supervision of this Islamic banking segment of our financial sector,” Kasekende said.
 
Regarding questions on currency, he said currency printing like many of the work processes in the Bank of Uganda, is subject to very rigorous processes with inbuilt controls for checks and balances.
 
He said before the currency is printed there are deliberate checks at various levels including the Currency Policy Committee headed by Governor, Bank of  Uganda coupled with a strong and independent audit function, have over time been robust enough to maintain the integrity of our currency operations.
 
“There has been no extra currency printed outside the amounts that were by the Governor approved through the requisite processes,” Kasekende said.
 
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