eCedi must be implemented to forestall disruptions in payment space – BoG

The Bank of Ghana (BoG) has noted that in recent years, the idea of issuing digital currencies by central banks has been topical around the globe.

The BoG said it is one of the first few African central banks which declared its intention to pilot a Central Bank Digital Currency (CBDC) within the framework of its financial sector digitization program and the overall digitization agenda of the Government of Ghana.

From the point of the CBDC classification, the BoG said, the digital Cedi (or the eCedi) is a retail token-based CBDC. 

This is a value based approach that implies an eCedi that represents a token, or a digital value note. Payment is done by transferring the value note from one person to another.

The concept is similar to cash payment transactions, where payment is done by transferring banknotes and/ or coins from person A to person B.is particularly important that the eCedi is implemented to forestall disruption to the existing payment space.

For this reason, the eCedi will be integrated into the existing interbank payment systems and mobile money interoperability platform operated by the Ghana Interbank Payment and Settlement Systems Limited (GhIPSS).

In its report titled “Design Paper of the digital cedi”, the BoG said “The eCedi has to be accessible to everyone and any part of the country. Absence of mobile data networks in the rural areas of Ghana should not serve as a barrier to the use of the eCedi. In other words, the eCedi should work effectively in both online and offline environments.

“Speed of payment is very important from a consumer`s perspective. The transfer of funds from a payer to a payee should be near instant, easy to confirm and traceable. Both the sender and receiver should receive a confirmation of a successful transaction. Similar to cash, an eCedi transaction will be free of charge to consumers.

“By this approach, the eCedi would be a strong contender of cash, promote competition in the payment market and facilitate the provision of innovative valueadded services to individuals and businesses by banks and payment service providers at affordable fees and charges.

“It is particularly important that the eCedi is implemented to forestall disruption to the existing payment space. For this reason, the
eCedi will be integrated into the existing interbank payment systems and mobile money interoperability platform operated by the Ghana Interbank Payment and Settlement Systems Limited (GhIPSS).

“In the era of the globalisation, it is important that domestic CBDCs are designed with the prospects of adaptation for interoperability with CBDCs of other jurisdictions. Efforts to accelerate integration of the economies of African economies, particularly under the African Continental Free Trade Area (AfCFTA) makes this a key consideration in the eCedi design. The eCedi takes into consideration CBDC standards, making it possible for Ghana to participate in international projects on cross border CBDCs.”

Source: 3news