Ghana has come to the forefront among African countries pushing to develop the Central Bank Digital Currency (CBDC), as governments around the world seek alternatives to cryptocurrency.
Bank of Ghana (BoG) has announced that it would issue the first set of a three-pilot-phased nation’s digital currency come September this year.
BoG’s First Deputy Governor, Dr. Maxwell Opoku-Afari said the digital currency would be known as e-cedi.
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According to him, the currency would operate in a sandbox interim and will hinge on advancing financial inclusion and facilitating trade towards a cash-lite economy.
Dr Maxwell Opoku-Afari further noted that the digital currency, when fully adopted, will outline the use of other digital currencies.
“Digital Currency is part of the central bank acknowledging the need for digital payment and digital delivery of financial services. By this, the Bank of Ghana will provide a platform on which we can add more value to digital transactions.”
He added that the financial body will take out time to design it with all the security features and so have started it in a pilot phase through what it calls a sandbox to learn lessons before it is opened up to the general public.
He explained that the central bank’s digital currency is FIAT money. “It is cash on its own so that the financial institution like the banks and FinTechs will be able to create value addition on the digital cash,” Dr. Opoku-Afari said.
The Deputy Governor also assured of the central bank’s resolve in ensuring the viability of the e-Cedi before it is introduced to the general public as a legal tender for financial transactions.
The Bank of Ghana, like its Nigerian counterpart, has repeatedly warned about the use of cryptocurrencies, particularly bitcoin. The Central Bank of Nigeria had in February banned regulated financial institutions from handling cryptocurrency transactions, and subsequently announced it is developing a digital currency that will offer Nigerians a regulated alternative to bitcoin.
There has been a global push by central banks, led by China, to create alternative to cryptocurrencies. The push stems from the growing shift to digital currency payments buoyed by the desire for cheaper and swifter cross-border payments. Also, many countries see the increasing influence of cryptocurrencies as a threat to their traditional financial system, and are working to curtail it by offering central bank-backed alternative digital currencies.
While many countries including the US, Japan and the UK have embraced the trend, question remains on how they would remove the bottleneck of centralized finance. Cryptocurrency is widely adopted due to its DeFi, (decentralized finance) system powered by the blockchain ledger. It has enabled swift cross-border transactions free from intermediary charges that have characterized regulated financial systems.