Digital Currency for West Africans
Digital Currency of their own, soon in Senegal
Digital currency will soon be using in Senegal as the central bank ushered the use of blockchain technology in the country. For Fintech, it is another chance to aid the budding markets progress traditional banking systems and make more financial resources for people. If the roll-out become successful in Senegal, the blockchain-enabled digital currency will be utilized in most Francophone West Africa Cote d I’voire, Lusophone Guinea, Togo, Niger, Mali, Burkina Faso and Benin. They are also known as the eCFA which designed to run together with the West African Franc, CFA.
According to the statement, Monetary Union (link in French) and the West African Economic nations will use the eCFA which will be issued by Banque, Regionale de Marche’ (regional bank).
Central Bank Issued Digital Currency
The eCFA has been created to operate with current mobile money platforms such as MPesa which make themselves radical for millions of Africans who don’t have bank accounts. This electronic currency will be generated with the technology that eCurrency Mint Limited created. This company is the one responsible in making central banks produce their own digital currency. This currency has been designed to circulate together with paper money as legal tender.
The founder of eCurrency Mint, as well as the CEO, Jonathan Dharmapalan explained that digital currency can have the same characteristics of a paper money such as the governor’s signature, serial number, water mark and other security features.
“By layering these together and binding them into a single instrument you have essentially created a central bank-issued digital currency.”
Behind the currency is the physical technology, digital production engine which Dharmapalan showed in his presentation. This engine has a pyramid-like structure with a small slot at the peak. Every central bank will have engines on their own, kept offline and locked in a vault.
The CEO also explained that the operation depends on the central bank if they want to use it. The benefits that this new technology showed have been tempered by shortage of clear information on how it will be going to work.
Some skeptics say the kind of distributed ledger is unclear. The new digital currency that will be using could create issues in the future regarding its regulation for the regional bank of the West Africa.
The first African country to use the technology of blockchain to digitize its money is Tunisia. They launched eDinar this year. On the other hand, Ecuador launched their first digital currency globally last year. Central banks all over the world are studying this kind of technology of digital currencies. Nonetheless, they are excited about the innovation of distributed ledger that permits the secure transmission of information, without anything or anyone else involved. This is according to the 2015 report that was released for International Settlements by the Bank which members are 60 and more central banks.
However, digital currencies are not easy to regulate and at this very moment it had no links to the superior currencies. Digital currency that was issued by the central bank permits country’s treasuries to utilize and take advantage of the technology that makes cryptocurrencies possible, without leaving control to decentralized groups such as Bitcoin.
The banks can be able to maintain their position as the only entity that have the authority to issue national currency as they take charge on issuing e-currency before independent blockchain digital currencies set foot in Africa.