BoG completes first proof of concept as part of Project DESFT

The Bank of Ghana (BoG) has completed the first Proof Of Concept (POC) as part of Project Digital Economy Semi-Fungible Token (DESFT).

It demonstrates the successful execution of a cross-border transaction payment making use of digital credentials, the eCedi and an approved stablecoin from Singapore.

Mr. Kwame Oppong, the Director, Fintech And Innovation Office BoG, speaking at the launch of Completion Of Cross-Border Trade Using Digital Credentials, said the Central Bank in collaboration with MAS initiated Project DESFT in June 2023.

The first phase of the project saw the design and development of a trusted credential system that enables SMEs to transform key information.

These include basic credentials, licences, certificates, and trade records into verifiable digital credentials on a secure distributed ledger system, allowing potential trade partners and financial institutions to efficiently verify the authenticity of such information.

He said expanding upon the groundwork, in April 2024, Phase 2 of the Project DESFT was executed a cross-border trade between Ghana and Singapore, leveraging the DESFT solution, Universal Trusted Credentials (UTC), a Singapore Stablecoin, the recently piloted Ghanaian Central Bank Digital Currency, the eCedi, and the Purpose Bound Money protocol.

He said the live transactions demonstrated the feasibility of utilizing the proposed Ghanaian domestic retail CBDC platform, the eCedi in cross-border transactions.

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

He said the prospective introduction of the eCedi was poised to significantly enhance Ghana’s dynamic payment ecosystem, fostering inclusive growth and innovation while improving consumer experiences.

The Director said with its interoperability with the DESFT system, and verifiable credentials via UTC, the eCedi had the potential to facilitate the participation of Ghanaian Micro, Small, and Medium Enterprises in international trade cost-effectively.

Project DESFT is aimed at supporting SMEs in Africa to engage in international trade by removing significant obstacles they face, such as establishing trust with overseas trade partners and obtaining support 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 said the Bank had rigorously tested a cross-border payment solution built upon the principles of Purpose Bound Money (PBM) and conducted real trade experiments which fully align with our predetermined objectives.

The next phase of Project DESFT will continue to build upon the current achievements, focusing on highly automated digital credential processes, programmable payments across multiple digital currencies, and support for supply chain finance.