The Bank of Ghana has revealed it is in the advanced stages of introducing a digital currency, the e-cedi.
A Central Bank Digital Currency (CBDC) is the digital form of a country’s fiat currency that is also a claim on the central bank. Instead of printing money, the central bank issues electronic coins or accounts backed by the government’s full faith and credit.
Speaking at a news conference, the central bank governor, Dr Ernest Addison, disclosed they are in the final stage, where a pilot would determine whether the digital currency will be feasible before it goes into circulation.
“The Bank of Ghana was one of the first African Central Banks to declare that we were working on a digital currency looking at the concept of an e-cedi. Yes, we are quite advanced in that process. As you know, with these types of things, you have to go at it in phases and the first phase was really on the design of the electronic money and the team that has gone quite far in the design phase, they are looking at the implementation phase.” Dr Ernest Addison Governor of the central bank of Ghana.
He further added that after the implementation phase, they will have a pilot phase where a few people would be able to use the digital cedi on the mobile applications and other applications that are currently running.
However, the central bank governor issued a warning to the public that the activities of cryptocurrencies were currently not regulated because of their volatility, saying that cryptocurrencies such as Bitcoin were too volatile to play the function of money hence the need for a state-backed digital currency such as the e-cedi.
“You have seen the sharp changes in the valuations of some of these coins, the Bitcoin large, large swings in the value of the currency. The basic function of currency is for them to be used effectively as a medium of exchange or even as a unit of account, so when you have a currency whose value is so unstable, you really cannot use it effectively to meet any of the standard functions of money. This is why, I think there is a lot more emphasis on looking at digital money which is backed by the state, backed by the central banks. These private forms of money really are not able to perform the functions of money effectively”. Dr Ernest Addison Governor of the central bank of Ghana.