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BusinessCentral Bank concludes initial proof of Concept within Project DESFT

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Central Bank concludes initial proof of Concept within Project DESFT

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The Bank of Ghana (BoG) has successfully concluded the initial Proof Of Concept (POC) within the framework of Project Digital Economy Semi-Fungible Token (DESFT).

This achievement showcases the effective facilitation of cross-border transaction payments through the utilization of digital credentials, the eCedi, and an authorized stablecoin from Singapore.

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Mr. Kwame Oppong, Director of the Fintech And Innovation Office at BoG, highlighted during the launch event for the Completion Of Cross-Border Trade Using Digital Credentials, that the Central Bank, in collaboration with MAS, launched Project DESFT in June 2023.

The initial stage of the project focused on developing a reliable credential system enabling SMEs to convert essential information, including licenses, certificates, and trade records, into verifiable digital credentials stored on a secure distributed ledger system. This allows potential trading partners and financial institutions to efficiently authenticate such information.

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Expanding on this foundation, Phase 2 of Project DESFT was implemented in April 2024, featuring a cross-border trade between Ghana and Singapore. This phase utilized the DESFT solution, Universal Trusted Credentials (UTC), a Singapore Stablecoin, Ghana’s recently piloted Central Bank Digital Currency (CBDC) – the eCedi, and the Purpose Bound Money protocol.

Mr. Oppong emphasized that the live transactions demonstrated the practicality of leveraging Ghana’s proposed domestic retail CBDC platform, the eCedi, in cross-border trade operations.

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“This affirms the potential of the eCedi system demonstrated for future interoperability with various cross-border credential and payment platforms,” he added.

He mentioned that the upcoming launch of the eCedi could greatly improve Ghana’s payment system, promoting inclusivity and innovation while enhancing consumer satisfaction.

The Director highlighted that through its compatibility with the DESFT system and verifiable credentials via UTC, the eCedi could enable Ghanaian Micro, Small, and Medium Enterprises to engage in global trade more affordably.

Project DESFT aims to assist African SMEs in international trade by addressing major hurdles like building trust with foreign trade partners and accessing assistance in cross-border payments and supply chain finance.

“We believe that the new generation of financial technology offers innovative approaches to these challenges. After nearly a year and two phases of development, we have crafted a reliable information exchange solution founded on UTC standards and Semi-fungible Token technology,” he said.

He mentioned that the Bank had thoroughly tested a cross-border payment solution based on the Purpose Bound Money (PBM) principles and conducted actual trade trials that completely matched our set goals.

The upcoming phase of Project DESFT will further expand on the current accomplishments, concentrating on highly automated digital credential procedures, programmable payments involving various digital currencies, and assistance for supply chain finance.

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