Bank of Ghana partners with Singaporean monetary authority in testing the use of digital currency for cross-border trade

The Bank of Ghana and the Monetary Authority of Singapore recently completed their first Proof-of-Concept for the project Digital Economy Semi-fungible Token (DESFT). The project was completed in 2 phases demonstrating the use of digital credentials in international trade and cross-border payments.

Phase 1 involved developing and designing the system, Phase 2 was an executed cross-border trade between Ghana and Singapore, utilising the system as the DESFT solution.

This milestone is important because DESFT represent a new approach to international trade. They could potentially streamline and simplify the process by using digital credentials. This could lead to faster transactions, lower costs, and reduced fraud risk.

The project's next phase will include more automated digital credential processes, programmable payments across multiple digital currencies, and supply chain finance support.

The project was launched in June of 2023 to introduce faster options and implement solutions including Universal Trusted Credentials (UTCs), Central Bank Digital Currency (CBDC), stablecoin, trade marketplace, and escrow arrangement, which enable payments upon the successful verification of digital credentials.

The BoG stated that using eCedi which is Ghana's Crypto-Based Digital Currency (CBDC) in live transactions would boost its potential for wider interoperability with various credentials and payment systems, which will make it easier for Ghana to participate in global trade

Maxwell Opoku-Afari, the Bank of Ghana's first Deputy Governor, said the project would help African SMEs enter international trade by removing significant barriers.

The Ghanaian CBDC, (eCedi) infrastructure was designed and developed by G+D, a German company that provides banknote and securities printing, while Fidelity Bank Ghana provided banking services and facilitated eCedi exchange transactions and Stablecoin. The Singapore dollar-pegged stablecoin issued by StraitsX was used for digital payments based on the Purpose Bound Money (PBM) concept, among others.

Mahamudu Bawumia, Ghana's Vice President announced in May of 2024, that government agencies would be able to access services online and make electronic payments. In the same month, Ghana agreed with India to implement India's Unified Payments Interface (UPI) on its Ghana Interbank Payment and Settlement Systems (GHIPSS) to facilitate low-cost, instant fund transfers.