What is e-Cedi?

Money is important in our modern society. From time immemorial, physical items have been used to facilitate the exchange. The modern world uses notes and coins to serve as legal tender. This means that society’s need to find a medium of exchange remains important.

Due to the advancement of digital technologies, there has been a rise in digital payment, which has led to the emergence of digital currencies including cryptocurrency and bitcoin.
Because of these developments, Central banks across the world have considered issuing their own digital currency known as Central Bank Digital Currency (CBDC).

WHAT IS THE CENTRAL BANK DIGITAL CURRENCY (CBDC)?

A Central Bank Digital Currency (CBDC) is an electronic form of currency that is issued by a central bank.

GHANA’S DIGITAL CURRENCY E-CEDI

In 2019, the Bank of Ghana declared that it will launch the nation’s digital currency, which will be known as the e-cedi. Fast forward to 2022, the central bank issued a 32 paged document that offers details on the vision of the e-Cedi, key motivations, expected benefits, and design principles, including governance and accessibility, interoperability, requisite infrastructure, and security.

The e-cedi is an electronic form of the Ghana cedi, it can be converted into the form of physical cash and used for various transactions. Some advantages that come with using the e-cedi are that it offers a more efficient mode of making payments, a low cost of transaction, and also faster processing period.

The e-cedi can also save the bank of Ghana the high cost of printing notes and minting coins abroad.

Unlike cryptocurrency, the e-cedi has a stable value meaning, it level of volatility is low. Also, it will serve as a powerful tool for financial inclusion in the Ghanaian economy.

DISADVANTAGES ASSOCIATED WITH THE E-CEDI

• The e-cedi will be a direct competitor to the providers of digital payment, especially mobile money. Meaning there will be a loss for those in the fintech industry.
• Another disadvantage is that the government will be able to track and trace your transactions which means that the government has access to information on your spending habits.
• It can also be a competitor to in-person bank deposits in the banking sector.

IN CONCLUSION

The e-cedi provides the innovation needed to support the ecosystem of digital payment.
By piloting the e cedi, the Bank of Ghana will be able to master and manage the CBDC effectively.

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