The Significance Of Digital Currencies In Ghana

Financial innovation and inclusion win when a country has a collaborative and listening regulator that works with fintechs and relevant stakeholders in building a more inclusive ecosystem.

It was great news to hear the Central banks of Nigeria and Ghana indicating their plans to issue their own CBDCs. The inclusion of CBDCs comes as a step in the right direction for financial inclusion and innovation.

One may ask, what are CBDCs? Central Bank Digital Currencies (CBDCs) are digital currencies created by Central Banks backed by their country's local currency, which still maintains their properties as a legal tender and a store of value just as cash.

This means that people can have cash stored in their digital wallet and can make transactions anywhere, anytime digitally. This significant step will help us achieve a cashless economy faster than we anticipated.

This news also serves as an opportunity for fintechs to tap into this infrastructure to build and scale new and existing solutions. These currencies will mostly find their way through these digital pipelines.

Despite the Central banks of Ghana's stance against Cryptocurrencies, I believe there are still steps taken by BoG to effectively regulating its activity to ensure its mass adoption locally. Furthermore, BoG’s stance on anti-cryptocurrency has always been in customers’ interest, considering recent developments in Turkey, where over 60,000 users were affected by a crypto scam.

The introduction of digital currency comes as a piece of great news. It will go a long way to increase financial inclusion, monitor and minimise the risk of fraudulent financial activities, and increase seigniorage. Furthermore, CBDCs will ensure consumer protection, among many other significant impacts that come with it.

Also, I believe it will defeat the purpose of ensuring a more decentralised financial ecosystem, making it more open but accountable like cryptocurrencies. However, its successful implementation puts potential banks at risk of extinction.

In conclusion, financial innovation and inclusion must always win, and that can be achieved in a more inclusive financial ecosystem where regulators, Fintechs, Incumbents are working collaboratively. Whilst this comes as great news, I believe the downsides of its implementation must be considered to minimise the impact on other institutions that might be negatively affected.

Co-founder of Startup Accra, Norbert Dziwornu