Ghana Prepares to Introduce e-Cedi in 2025, According to Official Announcements

Ghana is set to join the growing list of countries exploring central bank digital currencies (CBDCs) with the planned launch of its own digital currency, the e-Cedi, later this year. However, the passage of the law to legalize digital currency has been delayed due to the need for cautious review and alignment with financial sector safeguards and economic policy goals.

The Bank of Ghana (BoG) has been developing the e-Cedi for over five years, and it aims to provide offline functionality for digital payments, a feature that sets it apart from some other CBDCs. This emphasis on offline functionality is a response to Ghana's relatively low internet penetration levels, currently around 70%.

The e-Cedi leverages technology also used in Singapore, Thailand, and Brazil, but unlike the eNaira, its official launch depends on lawmakers passing legislation to legalize digital currency. The BoG, in its pursuit of the e-Cedi, has opted for a centralized model instead of decentralized ledger technology (DLT) in its initial phase.

The BoG sees CBDCs as the future of digital payments, and they believe the e-Cedi could allow people to live off-grid and use it as they would use cash. This vision is shared by Kwame Oppong, the Head of Fintech and Innovation at the BoG, who has stated that the e-Cedi is intended to provide a digital payment solution for those living in areas with limited internet access.

The Bank for International Settlements (BIS) argues that CBDCs could eventually make stablecoins obsolete. As of now, 72% of central banks expect to issue a digital currency, with 48% planning to do so within the next five years. However, some central banks have abandoned CBDC plans, arguing that instant payment systems (IPS) are sufficient.

Ghana's mobile penetration is over 100%, indicating a high potential for digital payment adoption. The BoG has worked with Germany's Giesecke+Devrient (G+D) to test the e-Cedi, and the success of these tests will play a crucial role in determining the timeline for the e-Cedi's official launch. Whether the CBDC officially launches will depend on lawmakers passing legislation to legalize digital currency.

In conclusion, the e-Cedi, Ghana's upcoming CBDC, promises to provide a digital payment solution for those living in areas with limited internet access. The BoG's decision to prioritize offline functionality and opt for a centralized model sets it apart from other CBDCs. The success of the e-Cedi will depend on the passage of the digital currency legislation and the results of the tests conducted with G+D.