Ghana Foresees a Cashless Economy with its New CBDC Pilot Program

The Bank of Ghana is teaming up with Giesecke+Devrient (G+D) to launch a Central Bank Digital Currency pilot program. This move could make Ghana the first African country to unleash its digital currency. 

According to a press release, the collaborative effort will test the issuance of a general-purpose CBDC dubbed as Cedi through various stakeholders, including banks, consumers, merchants, payment providers, and many more. The gradual transition towards a cashless economy is part of the Digital Ghana Agenda, which plans to introduce the region and its citizens to a digitized setup. 

Moreover, the implementation could help onboard more individuals to receive banking services in a modernized infrastructure, consequently eliminating financial exclusion. Through Cedi, digital payments are easier to conduct without the need for any contract or bank account.

The Pilot Process

G+D and the Bank of Ghana hope to undertake the project in three stages. The first stage involves a comparative evaluation of the parameters surrounding the CBDC pilot. The project will consider Ghana’s regulatory, economic, and technical needs while expanding on potential frameworks. 

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G+D will play a significant role in the second stage by presenting a secure and highly available CBDC solution known as Filia. More importantly, this solution helps in safeguarding user data, adhering to every regulatory requirement, and offering an offline payment alternative in a case where there is no internet connection. 

The pilot phase is the last step whereby users can test this solution across diverse channels like smart cards or mobile applications. While the project is underway, there will be an examination of various topics related to the legal implications of the program, the security of the infrastructure, and how this solution may affect the payment system and Ghana’s monetary policy. According to the Governor of the Bank of Ghana, this project is a significant milestone that will enable Ghana to embrace an upcoming concept.

Possible Outcomes of a CBDC

A while back, Tanzania’s president Samia Suluhu issued a directive geared towards embracing blockchains and cryptocurrencies.

This action signifies Africa’s bold move to feature in the digital currency world. Once Ghana successfully ushers its CBDC, citizens will enjoy faster settlement services which offset the more extended transaction periods that traditional banks take. Furthermore, the existence of blockchain technology will instill trust in the financial system as transactional records are visible on a public ledger.  

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The cost of minting physical money is an expensive exercise that, in most cases, brings more harm to the environment. Opting for a cashless ecosystem with digitized money will significantly save the government’s resources which can be helpful in other sectors.