Bank of Ghana to pilot digital currency ‘e-Cedi’ as a payment system
The Bank of Ghana (BoG) is set to commence the pilot of a digital currency (e-Cedi) to complement and serve as a digital alternative to making payments through physical cash.
This development comes following the signing of an agreement by the Central Bank and Giesecke+Devrient (G+D), a German financial technology (fin-tech) company that provides services including banknote and securities printing, smart cards, and cash handling systems.
It is expected that the pilot of the currency would start in September this year, as the First Deputy Governor, Dr Maxwell Opoku Afare, hinted last month.
The Central Bank would be implementing the trial of the e-Cedi through partnership Giesecke+Devrient (G+D) as a general purpose Central Bank Digital Currency (retail CBDC).
With the provision of the required technology and development solution adapted to suit the Ghanaian financial environment, the trial phase would involve banks, payment service providers, merchants, consumers and other relevant stakeholders.
To two implementers of the digital currency have since signed an agreement to see to the success of the project, which would be a precursor to the issuance of a national digital cedi.
The project, which forms part of the ‘Digital Ghana Agenda, is to drive the country’s cash lite agenda through the promotion of diverse digital payments, while ensuring a secured and robust payment infrastructure in Ghana.
It also aims to facilitate payments without a bank account, contract, or smartphone, by so doing boosting the use of digital services and financial inclusion amongst all demographic groups.
In a joint statement after the signing of the agreement in Accra on Wednesday, August 11, the Governor of BoG, Dr Ernest Addision, said, “CBDC presents a great opportunity to build a robust, inclusive, competitive and sustainable financial sector, led by the Central Bank.”
He added that, “from all indications, the concept has a significant role to play in the future of financial service delivery globally. This project is a significant step towards positioning Ghana to take full advantage of this emerging concept.”
The CEO of the Giesecke+Devrient Currency Technology business sector, Dr Wolfram Seidemann noted central banks around the world were exploring the introduction of digital money as legal tender.
“The Ghanaian government is one of the first African countries now entering a pilot phase. We are proud to support Ghana with our technology and expertise,” emphasizes,” Dr Seidemann said.
The implementation of the e-Cedi
The project has been divided into three phases, with the first phase being design, where all framework parameters for the CBDC pilot would be specified and defined.
This includes economic, regulatory and technical requirements of the country as well as the definition of the parameters for the test phase.
In accordance with these individual requirements, G+D’s CBDC solution would be adapted for the Ghanaian context in the second phase.
In the pilot phase, a user group of diverse demographic and socio-economic backgrounds would test the solution in the field using different channels and form factors such as mobile apps and smart cards.
Over the course of the pilot project, a study would be conducted on the acceptance of the e-Cedi from the end users’ perspective. In addition, the IT security of the infrastructure, impact of the project on monetary policy and payment system, and the legal implications would be evaluated.
Insights from pilot user experiences would provide the central bank and G+D with valuable lessons for a nationwide rollout of the e-Cedi.
The First Deputy Governor of the Central Bank, Dr Maxwell Opoku Afare, on the sidelines of a media training organised by the Journalists for Business Advocacy (JBA) disclosed that BoG would in September this year pilot the digital Cedi.
He explained that the introduction of the digital Cedi, which would be regulated by the central bank, would further deepen financial inclusion, promote the efficiency and stability of the payment system, and foster competition in the financial sector.
He further noted that unlike mobile money, which is just electronic money backed by cash, e-cedi is cash in itself.
“So when it goes public, people can actually go to a bank and ask for either part or all of their money to be saved in e-cedi form.