“eCedi will not affect demand for deposits in commercial banks” – Governor Addison
Governor of the Central Bank, Dr Ernest Addison, has said the rollout of the eCedi is not likely to affect demand for deposits in commercial banks in the country.
His assertion which was a response to a question posed to him by norvanreports at the 105th MPC press briefing on Monday, March 21, on the IMF’s caution to the Central Bank of Nigeria (CBN) on the eNaira reducing demand deposits in Nigerian banks.
Per the IMF, eNaira like digital currencies elsewhere carries risks for monetary policy implementation and that the eNaira wallets may be perceived or even effectively function as a deposit at the Central Bank which may reduce demand for deposits in commercial banks.
To prevent this, the IMF proposed that the transfer of funds from bank deposits to eNaira wallets should be subject to daily transactions and balance limits to mitigate the risks of diminishing the roles of banks and other financial institutions.
Assigning reasons to his assertion that the eCedi is unlikely to face a similar problem, Dr Addison noted the eCedi unlike the eNaira is a retail-based Central Bank Digital Currency (CBDC).
According to him, the eNaira is a Central Bank-based CBDC and as such commercial banks in Nigeria are excluded from the distribution network of the eNaira and hence the possibility of the eNaira resulting in reduced demand for deposits in Nigerian commercial banks.
However, the commercial banks in Ghana are part of the distribution framework to be used in the rollout, distribution and circulation of the eCedi.
“Nigerians chose to have a digital currency which is central bank-based and not retail-based and therefore their commercial banks are not part of the distribution network and this is where the basic problem is.
“Ghana is not using that approach, we are having a retail based digital currency which will take advantage of the existing distribution frameworks similar to the way we where with the paper money and so we do not expect to have that problem in Ghana,” the Governor noted.
Meanwhile, the Central Bank, amid its pilot phase and subsequent rollout of the electronic cedi (eCedi), has created two wallets for the Central Bank Digital Currency (CBDC).
The apex bank in its eCedi Design Paper report, asserts the two wallets created include Hosted Wallets which will be managed by the various financial institutions in the country and Hardware Wallets which are secure portable storage devices held by individuals.
According to the Bank of Ghana (BoG), Hosted Wallets require access to the internet to be operational whereas the Hardware Wallets work in offline mode.
