The Bank of Ghana (BoG) in collaboration with the Monetary Authority of Singapore (MAS) has successfully completed the inaugural proof of concept for Project DESFT (Digital Economy Semi-Fungible Token). This groundbreaking project showcases the potential for leveraging digital credentials in the realm of international commerce and in the facilitation of cross-border financial transactions.
Project DESFT has been meticulously executed in two distinct phases, with the overarching goal of bolstering the engagement of Ghanaian Micro, Small, and Medium-sized Enterprises (MSMEs) in the global trading ecosystem through the establishment of a reliable credentialing system.
The initial phase of the project was dedicated to the thoughtful design and development of a system that is capable of streamlining the verification of trade-related information. This system is intended to alleviate the financial burdens typically shouldered by MSMEs in the context of international trade. Following the successful design and development, the second phase put the system to the test by conducting an actual cross-border trade transaction between Ghana and Singapore, utilizing the innovative DESFT solution.
Looking ahead, Project DESFT is set to embark on a new phase that will concentrate on the creation of highly sophisticated digital credentialing processes. This next phase will also explore the possibilities of executing programmable payments using a variety of digital currencies and providing enhanced support for financing within the supply chain.
The genesis of Project DESFT can be traced back to June 2023, when the BoG, in partnership with key players from the private sector, initiated the project. The vision was to introduce a suite of cutting-edge solutions that include Universal Trusted Credentials (UTCs), a Central Bank Digital Currency (CBDC), a stablecoin, a dedicated trade marketplace, and an escrow arrangement. This suite of solutions is designed to ensure that payments are securely processed following the successful verification of digital credentials and the fulfillment of trade agreements.
The Universal Trusted Credentials (UTC) framework is an innovative digital infrastructure that facilitates the representation and exchange of various official documents such as licenses, certificates, and trade records in a digital format. This framework is designed to streamline and secure the process of authenticating and transferring important credentials, thereby enhancing efficiency in trade and other sectors that require verified documentation.
StraitsX, a financial platform, has taken a significant step in the digital payments landscape by issuing a stablecoin that is pegged to the Singapore dollar. This stablecoin operates on the concept of Purpose Bound Money (PBM), which is a specialized approach to digital currency. The PBM concept ensures that the digital currency is designated for specific uses or transactions, providing a level of control and purpose to the way funds are spent. This targeted approach to digital currency usage aligns with the broader objectives of enhancing transparency and efficiency in financial transactions, particularly in the context of trade and commerce.
The Bank of Ghana (BoG) has expressed confidence in the eCedi, Ghana’s retail Central Bank Digital Currency (CBDC), highlighting its successful application in live cross-border trade transactions. The BoG believes that the eCedi demonstrates significant potential for future interoperability with a variety of international credential verification and payment systems. This advancement is expected to simplify the process for Ghanaian Micro, Small, and Medium-sized Enterprises (MSMEs) to engage in global trade activities, reducing the financial strain typically associated with such ventures.
The infrastructure for the eCedi has been meticulously designed and developed by Giesecke+Devrient (G+D), a renowned company specializing in banknote and securities printing, smart cards, and cash handling systems. In addition to the technological framework provided by G+D, Fidelity Bank Ghana plays a pivotal role by offering essential banking and currency exchange services in relation to the eCedi.
Maxwell Opoku-Afari, the first Deputy Governor of the Bank of Ghana, has voiced his support for the project, emphasizing its potential to dismantle significant barriers that African SMEs face when attempting to enter the international trade arena.
Further showcasing Ghana’s commitment to digital transformation, Vice President Mahamudu Bawumia announced in May 2024 the country’s strides in digitizing government services. He highlighted that government agencies are now equipped to access services online and conduct transactions electronically. Additionally, Ghana is actively investing in blockchain technology to bolster the security and integrity of government data, ensuring that every alteration to digital records is meticulously tracked.
In a parallel development during the same month, Ghana entered into an agreement with India to implement the Indian Unified Payments Interface (UPI) within its own Ghana Interbank Payment and Settlement Systems (GHIPSS). This collaboration is aimed at facilitating low-cost, instant fund transfers, further enhancing the efficiency and accessibility of financial transactions within the country.
