Ernest Addison, the Governor of the Bank of Ghana, disclosed last month that there were plans to introduce a new digital currency called the E-cedi.
The process is expected to rollout in three phases, beginning in September this year.
E-cedi is a digital form currency of the country’s fiat currency which the Bank of Ghana will issue as electronic coins or tokens as an alternative to printing money.
The central bank will use the first pilot phase to test the E-cedi and use the feedback gained to further improve the digital currency.
In a recent press address, the First Governor of BoG, Dr. Opoku-Afari provided some details about the digital currency.
Digital Currency is part of the central bank acknowledging the need for digital payment and digital delivery of financial services. By this, the Bank of Ghana will provide a platform on which we can add more value to digital transactions. We have to take out time to design it with all the security features and so have started it in a pilot phase through what we call a sand-box to learn lessons before we open it up to the general public. Dr. Maxwell Opoku-Afari
Will E-cedi be like Bitcoin?
The E-cedi will be different from the traditional crypto coins (Bitcoin, Ethereum etc)
E-cedi is a Central Bank Digital Currency (CBDC), and as such has the backing of the state to be used as a medium of exchange.
The nature and volatility of Bitcoin renders it inefficient to be used as a stable currency. The valuation of Bitcoin is constantly swinging depending on the dynamics of the market, or in some cases a single tweet from Elon Musk.
A Central Bank Digital Currency (CBDC) is not a form of cryptocurrency although it may operate on a blockchain. The difference is that CBDCs are created by central banks (in this case Bank of Ghana), but cryptos are not operated by any central banks.
Countries adopting CBDCs
Ghana is not the first to test Central Bank Digital Currencies.
In April this year, The People’s Bank of China introduced the ‘digital yuan’ which is a digital version of the country’s currency (Yuan).
The Central Bank of Nigeria and the South African Reserve Bank has also announced plans to release their own digital currencies by the end of the year.