Bank of Ghana to pilot digital cedi in September

The Bank of Ghana will in September, this year, pilot the digital cedi, the First Deputy Governor, Dr Maxwell Opoku-Afari, has hinted.

This, he said, formed part of the BoG’s agenda of creating cash-lite society.

n an era of cryptocurrencies, he said the introduction of the digital cedi would also help Ghanaians, who wanted to trade with digital currencies, to do so safely.

Dr Opoku-Afari said this in an interview with the media on the sidelines of a media training organised by the Journalists for Business Advocacy (JBA).

Regulated by central bank

He said the introduction of the digital cedi, which would be regulated by the central bank, would further deepen financial inclusion, promote the efficiency and stability of the payment system, and foster competition in the financial sector.

He said the BoG would take its time to design it with all the security features.

“We want to ensure that when we make the e-cedi public no one will be able to create fake ones. So we want to first pilot it in a sandbox to learn lessons, fix what needs to be fixed before we open it up to the entire population.”

He said the Sandbox, which was like an incubator where ideas would be developed, was already in place, with lots of FinTechs and banks already connected.

“We are looking at selecting about 500 of those FinTechs for the piloting from September and the success rate will determine when the e-cedi will be introduced to the general public.

He said even after the pilot phase, the Sandbox would still be maintained for the development of future products.

Cash on its own

He said unlike mobile money, which is just electronic money backed by cash, e-cedi was cash in itself.

“So when it goes public, people can actually go to a bank and ask for either part or all of their money to be saved in e-cedi form.

“The central bank’s digital currency is fiat money – it is cash on its own,” he said.

The first deputy governor also pointed out that as part of the preparations for the launch of the digital currency, there would be a coordination between the BoG and other central banks across the world, to enable Ghanaians to use e-cedi for international transactions as well.

Workshop

The training workshop, which was held on the theme : ‘‘Understanding monetary policy in post-pandemic era’’, was organised by JBA, with support from the BoG.

Dr Opoku-Afari said understanding what had happened and how the policies which were introduced by the BoG could be adapted in a post-COVID environment was crucial.

He said it was for this reason that the BoG was supporting JBA to educate and sensitise journalists.

Challenging aspect

The President of JBA, Mr Suleiman Mustapha, in his welcome address, said monetary policy was one of the most technically challenging aspects of macroeconomic management even in normal times.

He said those challenges had been intensified in geometric proportions by the effects of COVID-19 on the global economy and the peculiar impacts it had had on Ghana’s economy.

“At the fundamental level, monetary policy over the next couple of years will have to underpin the effort to bring Ghana’s economy back to its inherent capacity after falling well below optimum levels, due to the slump in economic activity posed by the pandemic.

“But the economic boost required for this has to be implemented in such a way as to ensure it does not stoke the fires of inflation, the key consideration for the Bank of Ghana as an inflation targeting central bank.

What has even complicated the task at hand is that the government lacks the fiscal space to provide the requisite Keynesian type boost that is needed to rekindle economic activity and consequent output back to, and beyond the pre-COVID 19 levels,” he stated.

He said this meant that private capital was needed, something which could only be attracted if the right mix of price levels, liquidity and foreign exchange rates was achieved in combination with the most prudent fiscal policy framework.

“As economic and financial journalists we have a pivotal role to play in making this happen. Private investment and business activity thrive on information; not just news but the accurate interpretation of public policy and economic trends,” he said.

SOURCE: GRAPHIC / Emmanuel Bruce