BoG designs offline and online wallets for eCedi
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 Hardware Wallets work in offline mode.
“The most optimal form factor for the eCedi wallet is the app for a smartphone developed by commercial banks, FinTech companies, and other service providers. Other devices can be utilized depending on user preferences and payment scenarios. These could be smartcards (including the biometric ones) or wearables such as smart watches that contain communication capabilities and a secure element.
“Similarly, debit cards and USSD devices (feature phones) which are associated with the existing payment landscape in Ghana can be adapted for eCedi. Thus users can get the type of wallet that suits their needs from a bank or other financial service provider,” noted the Bank.
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The BoG in the report further asserts that the eCedi will be a retail token-based CBDC. A retail token-based eCedi is a value based approach that implies an eCedi that represents a token, or a digital value note.
Payment is done by transferring the value note from one person to another. The concept is similar to cash payment transactions, where payment is done by transferring banknotes and/ or coins from person A to person B.
In brief, retail CBDC is digital cash that is designed to take on most traditional attributes of physical cash (in practice, though, it may have other additional
functionalities depending on its final design).
Retail CBDC could be used by individuals for P2P transfers, and P2B, B2P, B2B, P2G, and G2P payments besides cash and existing payment media and instruments (e-money, payment cards, etc.)
Per the apex bank, it has developed the eCedi to meet the following strategic goals:
- Increase digitization of the Ghanaian economy;
- Foster financial inclusion and consumer adoption of digital payments;
- Anticipate the future role of BoG as an active regulator and facilitator of a digital economy;
- Foster the possibility of a more secure, efficient, and resilient payment system;
- Address the risk of unregulated privately issued digital “currencies” or virtual assets.
