Ghana’s central bank has partnered a German company to undertake central bank digital currency (CBDC) experimentation.
Bank of Ghana has teamed up with Giesecke+Devrient (G+D) to test a general purpose CBDC in the West African country.
Most central banks worldwide are researching or experimenting with CBDCs but few have made definite commitments to introduce them. In an announcement of its Bank of Ghana tie-up, G+D described their experimentation as the first general purpose CBDC in Africa.
General purpose (also known as retail) CBDCs are designed to be available to the general population, whereas their digital currency siblings – wholesale CBDCs – are for inter-bank use. The former are a ‘more far-reaching’ innovation, the Bank for International Settlements has said.
G+D is providing the technology and developing a solution adapted to Ghana’s requirements that will be tested during a trial involving banks, payment service providers, merchants, consumers and other relevant stakeholders.
Ghana’s pilot is a precursor to the issuance of a digital form of national currency, the cedi, according to G+D.
The digital cedi, or ‘e-cedi’, is intended to complement and become a digital alternative to physical cash. It also aims to facilitate payments without a bank account, contract or smartphone, boosting the use of digital services and financial inclusion.
The CBDC project will have three phases: design, implementation and pilot. In the pilot phase, a user-group of diverse demographic and socio-economic backgrounds will test the solution in the field, for example using mobile apps and smart-cards. The IT security of the infrastructure, impact on monetary policy and payment systems, as well as legal implications, will also be evaluated.
“CBDC presents a great opportunity to build a robust, inclusive, competitive and sustainable financial sector, led by the central bank,” said Bank of Ghana governor Dr Ernest Addision. “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.”
G+D’s CBDC solution is known as ‘Filia’, which, the Munich-headquartered company says, enables ‘secure, consecutive offline payments in case no network connection is available’.
Ghana.Gov platform up and running
Bank of Ghana’s e-cedi experimentation is part of the country’s broader ‘Digital Ghana Agenda’, which involves the digitisation of government services.
Other significant government-led digital projects of note include Ghana.Gov, a centralised public-sector digital payment platform, which launched last month in the nation of 30 million.
Communications and digitalisation minister Ursula Owusu-Ekuful said at the platform’s launch event that it would minimise the need for citizens to engage in physical money interactions, reduce the need for visits to offices to pay for services, as well as better enable government bodies to view money flows.
The government is also in the process of implementing a rural connectivity project to link unserved and underserved areas within the next two years, Owusu-Ekuful told the event’s audience.
“Four million citizens will be connected to voice and data telephony services in the remotest parts of our country,” she said. “Smart investment in infrastructure will improve access to the latest technology, result in greater availability of affordable and reliable broadband connectivity and broader adoption of digital technologies across the entire country as we are determined to promote digital inclusion and leave no-one behind”.
Meanwhile… Jamaica ‘mints’ its first CBDC
In a separate development, the Bank of Jamaica (BoJ) – a relative global frontrunner in its journey towards implementing a CBDC – has ‘minted’ the Caribbean island’s first batch of CBDC.
A total of J$230 million dollars (about £1.1m) in CBDC will be issued to deposit-taking institutions and payment service providers during a pilot run that will ends in December, the BoJ announced on 9 August.
The BoJ’s CBDC team demonstrated the process of minting digital currency during a ceremony in the presence of finance minister Nigel Clarke, central bank governor Richard Byles, members of the central bank’s senior management, as well as the management of tech provider Ireland-headquartered eCurrency Mint.
Clarke said that a legislative amendment to accompany CBDC will be in place before the end of the fiscal year. Also, a public competition has been held to propose a name, tagline, logo and image design for the CBDC. The BoJ’s deputy governor, Natalie Haynes, said a judging process was complete and that winners would be announced soon.
Another Caribbean island nation, the Bahamas, launched the first fully deployed digital version of a fiat currency last year.
=>>> Global Government Fintech’s dedicated ‘Digital Currencies’ section <==
‘Jamaica sets out digital currency ambitions’– our news story (23 March 2021) on Jamaica’s government setting out the timetable for a CBDC’s introduction, as well as providing specifics on technical aspects