Bank of Ghana working towards issuing first state-backed digital currency

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The Governor of the Bank of Ghana (BOG), Dr. Ernest Addison, has disclosed that the apex bank has made progress in issuing the country’s first central bank digital currency (CBDC).

Addison confirmed during a press conference that the project is now “in the advanced stages,” noting there is a need to approach the project in phases. The central bank governor mentioned three stages for the CBDC preceding the actual plan to launch the so-called digital Cedi: design phase, implementation stage, and pilot phase.

Why is the proposed digital currency exciting?

During the press conference, Addison revealed the expectations towards the issuance of the digital currency. He said, “After the implementation phase, we will have a pilot phase where a few people would be able to use it, use the electronic Cedi on the mobile applications and other payment applications that are currently running.”

Speaking further, Addison noted the advantages of state-backed digital currencies like the proposed e-Cedi as against other private, non-regulated digital currencies. He explained that digital currencies backed by the state, and equally backed by the central banks get more credibility and attention. “These private forms of money are not able to perform the functions of money effectively,” he said.

Gov. Addison also explained at the conference that unregulated digital currencies like BTC are “too volatile to play the function of money,” effectively.

First of its kind in Africa

The governor also made known the BOG was one of the first African central banks to announce its ready to work on a digital currency by considering the idea of creating an electronic version of its currency. He also pointed out the currency is “in the advanced stages” of introduction.

Other African countries looking at the establishment of a similar digital project are Morocco, South Africa, Egypt, and Kenya.

Addison added that the CBDC is a project many central banks are looking into. “The Central Bank of Ghana would release more details soon as regards the project,” he said.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.