Vodafone Ghana’s mobile money platform, Vodafone Cash, has been selected by the Bank of Ghana (BoG) among several entities to pilot the Central Bank’s Digital Currency (CBDC), eCedi.
The Bank of Ghana made this known in a statement responding to the concerns raised by players in the electronic money issuing space that the Central Bank is attempting to reduce the influence of mobile money to boost the bank’s new proposed eCedi.
BoG described the concerns as unfortunate, saying that “the underlying principle for rolling out the eCedi is to ensure that no stakeholder is short-changed. So, it is quite strange that any industry player would suggest that eCedi has been designed to hurt mobile money.”
“Our whole model is a do no harm strategy, and add value…Vodafone Cash is in the pilot. So, it cannot be said that eCedi will harm Mobile Money.”BoG
The concerns raised by industry players was on the basis of portions of the recent eCedi Design Paper released by the Central Bank, particularly two statements under Chapters 5 and 7 of the paper. According to these players, under Chapter 5, BoG made statements like “mitigate potential risks for the banking system disintermediation”, and in Chapter 7, it also said “The architecture model for the eCedi proposed by the BoG was developed with the aim of preserving the existing financial service landscape in view of the critical role of banks”.
These, concerned industry players feared that those two statements meant eCedi is designed to restore the dwindling influence of banks in the financial transaction intermediation, which is currently dominated by mobile money and the EMI players as a whole.
BoG Plans to Engage Players in the MoMo Industry
They also raised concerns about the lack of engagement with the industry players on the implementation of the eCedi.
Nonetheless, BoG explained that disintermediation of banks has to do with the choice between Central Bank holding the cash in accounts that they opened for customers at the commercial banks and also for fintechs to provide apps etc. for consumers to spend the money directly from the Central Bank or the token/value based model where the funds sit in accounts with the commercial banks.
“We chose the second model. That is what we meant by mitigating the disintermediation of banks. That way, the banks have deposits with which they can lend. It is never about reducing the influence of EMIs.
“We didn’t expect industry experts on the banking or fintech side to raise these concerns because we are actually hoping that this can help solve many of the mobile money players’ liquidity management problems and enhance their profitability significantly.”BoG
On the issue of lack of engagement, BoG noted that the plan was to first issue the design paper for people to read before engagements begin.
BoG, moreover, hinted that there is a whole media and education plan to be executed following the release of the Design Paper.
Meanwhile, contrary to the fears of the industry players, the Design Paper lists specific benefits of eCedi to Fintech companies and even their agents.
The Central Bank indicated that the eCedi ecosystem will further boost financial inclusion by potentially curing existing pain points; specifically, liquidity challenges with deferred net settlement of mobile money interoperability transactions.