Ghana is set to launch its CBDC, the e-Cedi, after comprehensive development and collaboration with G+D, focusing on offline functionalities to cater to unbanked populations. Simultaneously, the BIS warns that advancements in CBDCs may render stablecoins obsolete, advocating for improved traditional payment systems. The emphasis on technological advancements and inclusive financial solutions is evident in this evolving landscape of digital currencies.
Ghana was initially a leader in Africa’s pursuit of a central bank digital currency (CBDC) but has since fallen behind Nigeria, which launched its eNaira over three years ago. The Bank of Ghana (BoG) plans to introduce its digital currency, the e-Cedi, within this year, following five years of development and testing various payment scenarios in collaboration with the German technology firm Giesecke+Devrient (G+D).
Kwame Oppong, head of fintech and innovation at the BoG, indicated readiness to launch the e-Cedi, contingent upon the passage of necessary legislation. In a recent report by G+D, it was noted that 72% of central banks are poised to issue digital currencies within the next five years. A key focus for Ghana is to develop offline functionalities for the e-Cedi, addressing the needs of marginalized communities in remote areas with limited internet access.
“It was an important feature for us to deliver because, at present, there is no commercial solution that allows for digital money to function in an offline environment,” stated Oppong. With mobile connectivity exceeding 100% and internet access around 70%, offline payment capabilities are critical for reaching the unbanked population in rural regions. Oppong emphasized the importance of creating a payment instrument that could function without reliance on the internet.
In contrast to some central banks that are considering decentralized technologies for their CBDCs, Oppong noted that the Bank of Ghana will initially utilize a centralized model for the e-Cedi. However, the e-Cedi will be designed to allow interoperability with decentralized ledger technology systems.
In a separate discourse, Agustín Carstens, the general manager of the Bank for International Settlements (BIS), has reiterated criticisms of stablecoins, positing that they may become obsolete as CBDCs and enhanced payment systems emerge. During a recent conference in Mexico City, Carstens suggested that many requirements for digital assets arise from the sluggish progress of traditional payment systems.
Carstens questioned, “If we had, for example, a wholesale central bank money or reserve currency, technologically advanced, do you think that could make up for the demand for stablecoins?” He argued that since stablecoins rely on cash and central bank securities, the financial sector should focus on developing sound technological representations of traditional money.
The bank has previously criticized the perceived decentralization in the digital currency sector, noting that new centralized intermediaries often mediate within the cryptocurrency ecosystem. This points to the continued need for evolution within the financial framework surrounding digital currencies.
In conclusion, Ghana is poised to launch its long-awaited e-Cedi, aiming to leverage offline capabilities to serve unbanked populations effectively. Concurrently, the BIS continues to voice concerns about stablecoins, suggesting that advancements in CBDCs and payment systems could render them less relevant. As central banks worldwide explore the role of digital currencies, the need for sound technological frameworks and inclusivity remains paramount.
Original Source: coingeek.com
