Bank of Ghana & G+D To Pilot Central Bank Digital Currency In Africa

The Bank of Ghana has partnered with Giesecke+Devrient (G+D), a German digital solutions provider, to pilot a general-purpose Central Bank Digital Currency (retail CBDC) in Ghana, West Africa.

G+D’s role is providing the technology and developing the solution adapted to Ghana’s requirements. This will be tested in a trial phase with banks, payment service providers, merchants, consumers and other relevant stakeholders. To this end, the Bank of Ghana has signed an agreement with G+D to implement a pilot CBDC project as a precursor to the issuance of a digital form of the national currency, the Cedi.

The project is part of the Digital Ghana Agenda involving the digitisation of the country of 30 million along with its government services. The digital Cedi, or e-Cedi, is intended to complement and serve as a digital alternative to physical cash. This, will, in turn, drive the Ghanaian cash lite agenda through the promotion of diverse digital payments all the while ensuring a secure and robust payment infrastructure in Ghana. It also aims to facilitate payments without a bank account, contract, or smartphone. In doing so, it will be boosting the use of digital services and financial inclusion across all demographics.

Dr Ernest K. Y. Addision, the Governor of Bank of Ghana, stated that “CBDC presents a great opportunity to build a robust, inclusive, competitive and sustainable financial sector led by the Central Bank. 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, agrees. “Central banks around the world are 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.”

The project will be divided into three phases: design, implementation and pilot.

• Design: All the parameters for the CBDC pilot will be specified and defined. These will include Ghana’s economic, regulatory and technical requirements.
• Implementation: Based on these individual requirements, G+D’s CBDC solution would be adapted for the Ghanaian context.
• Pilot: A user group of diverse demographic and socio-economic backgrounds will test the solution in the field using different channels and form factors such as mobile apps and smart cards.

A study will be conducted on the acceptance of the e-Cedi from the end users’ perspective during the pilot phase.  Alongside it, the IT infrastructure security, the impact on monetary policy and payment system, and the legal implications will be evaluated. Insights from pilot user experiences are expected to provide the Bank and G+D with insight preceding a nationwide rollout of e-Cedi.

According to the Central Bank Digital Currency tracker US think-tank, Atlantic Council, African countries have shown a healthy appetite for digital currency. In fact, it has been expected and anticipated that Nigeria would get there first considering their two-year conversation on the digital naira. Now it seems Ghana will likely beat them to it. While there already exist more than the world’s fair share of cryptocurrencies, CBDCs have their place, regardless of the economic status of a country. The IMF declares some of those reasons as

• CBDCs are more cost-efficient than physical cash with their lower transaction costs;
• they can promote financial inclusion, meaning those who are unbanked can get easier and safer access to money on their phone;
• they can compete with private companies that need incentives to meet transparency standards and limit illicit activity; and
• they can help monetary policy flow more quickly and seamlessly.

Filia, G+D’s CBDC solution will combine the advantages of today’s cash with the needs of users in an increasingly digitised world. Not only will Filia guarantee security, high availability and resilience while protecting user data. They will also facilitate secure, consecutive offline payments where there is no network.

The specific dates for what so far looks to be a grand project have not yet been outed.