Bank of Ghana (BOG) Gov. Ernest Addison said the agency is now “in the advanced stages” of introducing a digital currency, and also issued a warning about “unregulated” cryptocurrencies.
“I think there is a lot more emphasis on looking at digital money which is backed by the state, backed by the central banks. These private forms of money really are not able to perform the functions of money effectively,” he said during a press conference, per Coindesk.
The West African country is getting closer to issuing the digital cedi, but Addison said the process has to unfold in three phases to ensure BOG maintains its reputation as Africa’s leader when it comes to embracing emerging financial technologies.
“With these types of things, you have to go at it in phases and the first phase was really on the design of the electronic money and the team that has gone quite far in the design phase, they are looking at the implementation phase,” Addison said. The next step will be a pilot phase “where a few people would be able to use the digital cedi on the mobile applications,” he added.
He said the Bank of Ghana was one of the first African Central Banks to declare it was working on a digital currency.
Addison also said during a press conference that unregulated cryptocurrencies like bitcoin are “too volatile to play the function of money.”
BOG recently partnered with Emtech — a digital transformation consortium — to launch a sandbox targeting blockchain, central bank digital currencies (CBDCs) and financial inclusion.
Serious discussions about CBDCs have been gaining steam in smaller regions. By way of example, the Eastern Caribbean Central Bank (ECCB) debuted DCash, and the Central Bank of the Bahamas launched the Sand Dollar, a digital currency backed by that nation’s central bank.
The development and deployment of CBDCs pose numerous risks, including disintermediation, higher costs, volatility of deposit funding, and threats to financial anonymity. China has already suggested worldwide mandates regarding how CBDCs should operate.