The whirlwinds that the adoption of central banks digital currencies have left behind the crypto and blockchain industries continue to revolutionize the sector, as more countries state every day that they are, at the very least, entertaining the idea of issuing a digital currency. Some of them are actually in advanced stages.
The newest country to join the fever is Ghana, located in the heart of Africa. The nation is reportedly looking at the idea of launching and using a central bank digital currency to enjoy the many benefits associated with it.
The governor of Ghana’s central bank Ernest Addison stated in the last few hours that the nation, located at the West part of the continent, could issue a digital version of its fiat currency, the cedi, in the not so distant future. In fact, Ghana is currently in conversations to come up with a pilot project in a “sandbox environment.”
Times of Change
Addison offered his thoughts about the matter at Ghana’s Annual Banking Conference, through a public transcript. The governor stated that the African nation-state is currently undergoing times of change.
He said that Ghana is quickly evolving and is experiencing what is called “digitization,” fueled by a prominent mobile banking industry that is powered by mobile phones. In fact, reports state that “mobile money” transactions experienced a 70 percent increase from 2017 to 2018, and the 2018 to 2019 period has seen more growth, as well.
In an effort to inject life to the aforementioned field, Addison stated that he gave the green light to the organization he leads to issue mobile money backed 1:1 by cedi and held in electronic wallets at the start of the week, one day before he announced to the world the idea of creating a CBDC.
“In its issuance of electronic money, GCB Bank would create electronic value backed by equivalent cash which will afford customers to have access to electronic wallets issued by GCB Bank (Ghana). The GCB Bank plans to leverage on its 189 branch network to offer its own agency banking services,” he explained.
Not Precisely Crypto
Yet, he observed that the mobile money would differ from traditional cryptos, per a report from local news platform MyJoyOnline. “It is just electronic money backed by currency,” he said at the press conference. “So [the central bank] cannot create money; they are only having an electronic representation of the cedi that the Bank of Ghana puts into circulation. So it is not crypto.”
It is not yet known which technology will be behind the “e-cedi” digital currency proposed by the executive. Not too many details about it have come to daylight, but Ghana appears to be on the right track as they look for modernization and digitization.
“The future of financial services is digitization. But, it raises some key strategic issues for the banking industry including how each institution can leverage digital financial services technologies for growth; whether through competition, co-opetition or partnerships. Despite these, the opportunities of digitizing financial services are enormous and can be explored effectively to scale up financial access for Ghana’s economic transformation agenda,” he said.
By Andres Chavez