The Central Bank of Ghana has issued a design paper on the digital Cedi, a central bank digital currency. The 32-page design paper outlines the findings of the research phase and further elaborates on the design and how the eCedi would work. The journey into the research of digital currency for Ghana has not started now. On August the 11th, 2021, the Bank of Ghana (BoG) issued a press release announcing that they had appointed Giesecke+Devrient (G+D), a German company, to pilot a general-purpose central bank digital currency in Ghana, West Africa. The model of choice for their CBDC was a retail model. G+D’s role was to provide the technology and develop a solution adapted to Ghana’s requirements; the testing was to be done in a trial phase with banks, payment service providers, merchants, consumers, and other relevant stakeholders. The purpose of the pilot phase is “aimed at getting insights from an end-user perspective, testing the IT security of the infrastructure, the impact of the project on the monetary policy and payment system, and the legal implications,” stated the governor, Dr. Ernest Addison.
The design paper, a summary of the testing phase, outlines the purpose of the eCedi in meeting strategic goals that include financial inclusion, increasing digitalization, fostering more payment methods, and addressing the risk of unregulated issued private digital currency. The paper also outlines the benefits of digital currency for the various stakeholders within the financial ecosystem. It also brings out the most important aspect of the work, so to speak, in that it outlines the two types of wallets, i.e., hosted wallets, which will be managed by financial institutions, and hardware wallets, which are secure and will be managed by the individuals. An important aspect is that the hosted wallets will require the internet, while hardware wallets will work offline.
The paper also mentions that the eCedi will be accessible to everyone and anyone, even to citizens in rural areas, as it will not require the use of the internet. Secondly, it will be free of charge to consumers, just like physical cash, and lastly, the transfer of funds from payee to payer will be instant, easy to confirm, and traceable.
The issuance of the design paper by the Bank of Ghana is proof that the financial face of the African continent is slowly changing as African countries are researching and are willing to experiment with CBDC’s. It also shows that most governments are adopting stakeholder engagement as a way of gathering views and feedback from their potential customers, unlike in the past when governments were unreachable and unconcerned about their citizens’ views.
Other African countries that have already embarked on the Central Bank Digital Currency, CBDC journey include Nigeria, the first African country to launch its CBDC; South Africa, which hopes to launch its CBDc later this year; Kenya, which has just issued their discussion paper; and Rwanda, which is in the very advanced stages of research.
In conclusion, all eyes are on Ghana as they prepare to move into the move phase, making the small West African country one of the successful pioneers of the digital currency.