The Governor of the Bank of Ghana (BoG), Dr Ernest Addison has said the launch of the digital currency- the e-cedi, has to be slowed because the central bank’s priorities for the project have changed.
He added that the dislocation of the country’s economy has affected the launch of the e-cedi project.
Speaking at the 111th MPC press briefing in Accra on Monday (27 March), Addison said, “As you know we have made a lot of progress with the e-cedi.”
“The pilot that we started has been concluded but in terms of our priorities, we initially thought we would have launched the e-cedi by now unfortunately for us 2022 happened; a year in which we had a very major dislocation of the economy, the inflation rate went very high and the currency lost a lot of value.”
“That is not the context in which you want to launch a digital currency. So we had to sort of slow down the process on that and refocus our effort on the macro, try to bring inflation down and then at that point we will go back to the e-cedi project and decide on the launch date. So the priorities have shifted because of the development in 2022,” Addison adde.
The e-cedi is designed as a digital replica of the Ghana cedi notes and coins. It is crafted as a retail token-based digital currency stored in a digital wallet, convertible to Ghana cedis in the form of cash or deposit money on a 1:1 ratio.
This is to say that the owner of e-cedis can redeem them for physical cedis and use it for a variety of payments.
A survey by the PricewaterhouseCoopers (PwC) indicates that 85% of respondents believe the e-cedi can help reduce money laundering and other illegal financial activities given the traceability and transparency usually associated with blockchain enabled solutions.
According to the PwC 2021 Ghana Banking survey, 60% of the respondents expect an improvement in the country’s foreign exchange reserves on the back of the safer, quicker and traceable medium of cross border payments and remittances the e-cedi provides.
“It must however be emphasised that the reserve positions of a country are much more a function of the competitiveness of that economy supported by the goods and services it produces and offers and the demand for those,” the survey added.
Banks expect a boost in trade finance activities with the introduction of the e-cedi. “Clearly there are benefits to the regulator and the nation at large if the e-cedi is well implemented.”
According to the survey, 95% of the respondents believe the e-cedi will positively impact the banking sector and wider economy by deepening financial inclusion, supporting the country’s digitisation agenda and helping improve monetary policy given the enhanced control of the regulator over money supply in digital currency form.
Infrastructure for e-cedi introduction
Also, 80% of the respondents are not ready with the required infrastructure and or are not sure if their current infrastructure will support the use of the e-cedi when introduced.
However, 78% of the respondents believe whatever form the e-cedi takes and technology requirements, their infrastructure should be ready within two years.