Bank of Ghana Partners With Singapore Monetary Authority to Test Digital Currency For Cross-Border Trade
The Bank of Ghana (BoG) and the Monetary Authority of Singapore (MAS) have successfully completed the first Proof-of-Concept (PoC) for the Digital Economy Semi-fungible Token (DESFT) project.
This innovative initiative was carried out in two phases, showcasing the potential of digital credentials in international trade and cross-border payments.
The completion of this project marks a significant milestone in international trade. DESFTs offer a new approach that can potentially lead to faster transactions, lower costs, and reduced fraud risk by leveraging digital credentials. This innovation promises to transform the landscape of global trade by making it more efficient and secure.
The next phase of the DESFT project will focus on automating digital credential processes, enabling programmable payments across multiple digital currencies, and supporting supply chain finance. These advancements aim to further enhance the efficiency and reliability of international trade operations.
Launch and Broader Objectives
Launched in June 2023, the DESFT project aims to introduce faster and more secure trade options by implementing solutions such as Universal Trusted Credentials (UTCs), Central Bank Digital Currency (CBDC), stablecoins, trade marketplaces, and escrow arrangements. These solutions facilitate payments upon successful verification of digital credentials, ensuring seamless transactions.
The Bank of Ghana emphasized that using the eCedi, Ghana’s Crypto-Based Digital Currency (CBDC), in live transactions would significantly boost its interoperability with various credentials and payment systems. This enhancement will enable Ghana to participate more actively in global trade.
Statements and Contributions
Maxwell Opoku-Afari, the Bank of Ghana’s First Deputy Governor, highlighted the project’s potential to help African SMEs overcome barriers to international trade. By simplifying the process and reducing costs, DESFTs can open new opportunities for small and medium enterprises.
The eCedi infrastructure was developed by G+D, a German company specializing in banknote and securities printing. Fidelity Bank Ghana provided banking services and facilitated the exchange transactions involving eCedi and stablecoins. The digital payments were conducted using the Singapore dollar-pegged stablecoin issued by StraitsX, based on the Purpose Bound Money (PBM) concept.
Conclusion
The successful completion of the DESFT Proof-of-Concept by the Bank of Ghana and the Monetary Authority of Singapore represents a significant step forward in the evolution of international trade and digital payments. With continued innovation and collaboration, projects like DESFT have the potential to revolutionize the way global trade is conducted, benefiting economies and businesses worldwide.
