Ghana to Launch e-Cedi; BIS Questions Future of Stablecoins

The Bank of Ghana plans to launch its digital currency, the e-Cedi, following extensive development and testing. This initiative aims to enhance financial inclusion, particularly for unbanked citizens in rural areas. Concurrently, BIS leadership comments indicate that CBDCs may diminish the relevance of stablecoins, advocating for improvements in existing monetary systems instead.

In recent developments, the Bank of Ghana (BoG) is poised to launch its central bank digital currency (CBDC), the e-Cedi, after five years of development. Initially a leader in Africa’s CBDC exploration, Ghana has since been eclipsed by Nigeria’s eNaira, which debuted over three years ago. The BoG has collaborated with Germany’s Giesecke+Devrient (G+D) to test various payment mechanisms on their CBDC platform, Filia, used by numerous other nations, including Singapore and Thailand.

Kwame Oppong, head of fintech and innovation at BoG, expressed confidence that the e-Cedi is ready for rollout this year, contingent upon legislative approval. A recent G+D report indicates a strong global trend toward CBDCs, with 72% of central banks considering issuance, and 48% aiming to implement them within the next five years. The report highlighted that Ghana’s focus on offline functionality seeks to assist marginalized citizens, particularly those in rural areas with limited internet access.

To achieve effectiveness, the e-Cedi will allow offline transactions, catering to Ghanaians without reliable internet connections. Oppong emphasized the importance of creating a payment instrument that enables individuals to operate off-grid, similar to cash transactions. He remarked, “We wanted to create an instrument that allows people to live off-grid and use it as they would use cash.”

The BoG has chosen a centralized model for the e-Cedi, diverging from decentralization approaches used in other CBDC initiatives. However, Oppong has indicated that the e-Cedi will be compatible with decentralized technologies in future implementations. He believes that countries adopting current instant payment systems will inevitably transition to CBDCs, making a direct leap beneficial.

Furthermore, the head of the Bank for International Settlements (BIS), Agustín Carstens, has expressed skepticism regarding the need for stablecoins, suggesting they may become obsolete due to the introduction of CBDCs and advancements in payment systems. During a recent conference, he inquired whether the advent of efficient central bank digital currencies could adequately satisfy the market demand currently attributed to stablecoins.

Carstens suggested that the financial sector should focus more on enhancing traditional monetary systems rather than relying on stablecoins and cryptocurrencies, which he views as inadequate long-term solutions. This stance is consistent with previous BIS reports critical of the underlying decentralization claims within the digital currency sector. The BIS maintains that while marketed as decentralized, the reality reveals significant reliance on centralized intermediaries within the crypto ecosystem.

The impending launch of Ghana’s e-Cedi marks a significant milestone in the nation’s digital currency journey, aiming to enhance financial inclusion, especially among unbanked populations. As discussions around CBDCs and their implications on stablecoins continue, the BoG’s approach underscores a strategic shift towards modernizing payment systems while addressing offline accessibility. The stance taken by the BIS further articulates the ongoing debate surrounding digital assets in the financial landscape, promoting a reconsideration of traditional monetary frameworks.

Original Source: coingeek.com