Bank of Ghana recently partnered with Giesecke + Devrient (G+D) in piloting a Central Bank Digital Currency (CBDC) in Ghana. G+D is a German company headquartered in Munich that provides Banknotes and Securities printing, smart cards and cash handling systems. It is also the second largest supplier of Banknotes in the world after De La Rue (located in Malta) , the company that prints Ghana's Cedi notes.
The CBDC which will be known as e-Cedi will be trial tested with banks, payment service providers and relevant stakeholders.
Digitisation of banknotes and coins is now top priority for most central banks around the world as societies are already advanced in cashless payment systems.
China has already taken the lead in developing or piloting a national digital currency, a project in motion since 2014. Its digital currency is called the 'Digital Yuan' or e-CNY.
The question most people ask is whether digital currencies are the same as cryptocurrencies and if so, how secured will our payment systems be?
There are two main differences between digital currencies and cryptocurrencies;
-Digital currencies are centralised, meaning there are a group of people and computers regulating the state of the transactions in the network. Cryptocurrencies on the other hand, are *decentralized*, and most of their respective communities make the regulations.
-Digital currencies aren't transparent. For example, an individual cannot select the address of a wallet and see each money transfer, as this information is confidential. Cryptocurrencies however, are transparent. Any user can see any transaction of another user because every transaction is placed in a *public* blockchain network.
Digital currencies per these two major differences are therefore regarded as highly secured and reliable for which reason they are being explored by many countries in order to be introduced as legal tender.
Digital currencies versus Cash and Coins.
Digital currencies have become necessary for the following reasons;
1. The cost of producing and storing physical Banknotes and coins is currently expensive.
2. Banknotes and coins are daily loosing their relevance in ease of use in today's cashless payment era.
3. Banknotes are easy to counterfeit.
4. Because of their anonymity(inability to identify and track transactions) , they can easily be used for illicit purposes unlike Digital currencies which are touted as having 'controllable anonymity'.
It is currently not clear whether the blockchain technology being used in cryptocurrencies are being used in any form in the creation of digital currencies.
Agencies or institutions operating digital currency services may be required to submit transaction data to their central bank on a timely basis. That would allow central banks to keep track of necessary data in order to crack down on money laundering and criminal offenses.
Some commentators have raised concerns however that the digital currencies could be used to increase surveillance on citizens.
These are however some of the perks associated with digital currencies.
Digital currency is therefore a bold step in the right direction for a country like Ghana and the world at large and therefore relevant stakeholders are encouraged to come on board to see how it can be replicated effectively in our demographic and socio-economic setting.
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