Ghana aims to launch its e-Cedi CBDC this year, focusing on offline functionality to enhance financial inclusion for unbanked rural residents. The Bank for International Settlements (BIS) predicts that CBDCs could overshadow stablecoins as traditional payments improve, underscoring the transition advantages of central bank digital currencies.
Ghana, a pioneer in Africa’s central bank digital currency (CBDC) initiatives, plans to launch its e-Cedi this year, after falling behind Nigeria’s eNaira, which started operations over three years ago. The Bank of Ghana (BoG) has been developing the e-Cedi for more than five years, collaborating with Germany’s Giesecke+Devrient (G+D) to test different payment scenarios on the CBDC platform Filia, supported by other countries like Singapore and Thailand.
Kwame Oppong, head of fintech and innovation at BoG, has indicated readiness to introduce the e-Cedi, pending legislative approval. A recent G+D report highlighted that 72% of central banks intend to issue a digital currency within the next five years, with Ghana focusing on offline functionality to ensure accessibility for residents in remote areas lacking internet connectivity.
Emphasizing offline capabilities, Oppong noted, “It was important for us to deliver digital money that functions in an offline environment.” This addresses the substantial unbanked population in rural Ghana, where internet access remains around 70% while mobile connectivity exceeds 100%. Oppong aims for the e-Cedi to provide cash-like usability in off-grid situations.
While recognizing the advantages of Internet-based payment systems (IPS), Oppong argues that the exclusive dependence on the internet could undermine financial inclusion. “Those who move to an IPS now will eventually transition to a CBDC,” he stated. Initially, Ghana plans a centralized model for the e-Cedi, which will later accommodate interoperability with decentralized ledger technology (DLT).
On a broader scale, the Bank for International Settlements (BIS) highlights potential challenges for stablecoins due to the advent of CBDCs and enhanced payment mechanisms. During the Chapultepec Conference in Mexico City, BIS General Manager Agustín Carstens questioned whether advanced central bank-issued digital currencies could diminish the necessity for stablecoins, given their reliance on traditional cash and treasury backing.
Carstens advocated for a transition toward developing superior, technologically advanced central bank offerings, suggesting they could effectively replace the demand currently met by stablecoins. The BIS has previously criticized the apparent decentralization in the cryptocurrency sector, claiming it’s controlled by centralized intermediaries.
Ghana’s upcoming e-Cedi launch underscores its effort to catch up in the CBDC realm, emphasizing offline functionality to aid unbanked populations. The BIS perspective suggests CBDCs could curtail the relevance of stablecoins as digital payments evolve. As central banks worldwide continue to explore digital currencies, Ghana is positioning itself strategically to leverage advancements in payment systems while addressing financial inclusion challenges.
Original Source: coingeek.com
