Digital innovations have transformed the global economy, enhancing connectivity, revolutionising industries and sparking growth. Yet new technologies often have their roots in technologically advanced countries and their benefits are often unevenly distributed – which has the potential to bolster inequality. Citizens themselves are often quick to adopt new products, with the internet and smartphones prime examples, only to be hindered by a lack of developed infrastructure – especially in emerging countries.
With central bank digital currencies, on the other hand, emerging economies are paving the way. These markets recognise the unique advantages of CBDCs. Digital payments are part of a country’s critical infrastructure, yet for many people in emerging economies, digital payments are simply not an option, requiring a bank account or, at the very least, a smartphone. And in most cases, digital payments require an internet connection.
CBDCs are a public digital currency that have the potential to revolutionise the payments world. One of the most important aspects is their ability to foster financial inclusion. Depending on a CBDC’s design, it can provide a large segment of the population with access to financial and digital services that simply weren’t accessible to them before.
The Bank of Ghana was one of the first African central banks to announce it was working on a digital currency, an important step in the ambitious Digital Ghana Agenda, aimed at stimulating growth and innovation in the west African country. G+D’s Filia solution supported the Bank of Ghana, helping it to achieve the strategic goals of the eCedi. These include financial inclusion and consumer adoption of digital payments, supporting the digitalisation of Ghana’s economy and advancing the possibility of a more secure, efficient and resilient payments system.
The eCedi has been built around the core principles of governance, accessibility, interoperability, infrastructure and cybersecurity. The recently published design paper of the digital Cedi provides detailed and impressive insights on the Bank of Ghana’s aims, such as ensuring trust, access throughout the country at any time and zero transaction fees for consumers. The eCedi has the potential to provide Ghanaians with a secure and reliable form of digital payment, defining it as a platform for digital innovations that are made in Ghana.
A truly inclusive CBDC needs to have a simple and intuitive user interface and come with zero – or very minimal – transaction fees for consumers. It must be available via low-cost devices, such as wristbands or smartcards, and it must be capable of offline payments. From the beginning, G+D has carefully considered financial inclusion and offline functionality as part of its CBDC solution – one of the many fundamentals built into its Filia solution.
In addition to promoting financial inclusion, CBDC has even more potential to benefit society. It can drive the move toward digitalisation, fostering the growth of the digital economy as more and more people can (easily) adopt the new technology. A recent multicountry survey by Ipsos MORI for OMFIF and G+D highlighted that citizens in emerging markets are very interested in CBDCs. Now is the time to harness this opportunity for the monetary system.
As a trailblazer in African economies, the Bank of Ghana’s eCedi can lead the way in fostering financial inclusion and narrowing the digital divide.
Roman Hartinger is Senior Analyst, CBDC at G+D.