Central Bank of West African States to regulate national digital currency

The Central Bank of West African States (BCEAO) is to regulate and distribute one of the first national digital currencies based on blockchain technology.

Dubbed the 'eCFA', the digital currency will first be rolled out in Senegal, and will circulate alongside the CFA (Communauté Financière Africaine (African Financial Community)) franc – the national and regional currency, used by 14 countries.

The development of the eCFA has been conducted by local bank Banque Régionale de Marchés (BRM) and eCurrency Mint, an Irish fintech start-up with a focus on central bank-issued digital currencies.

In a statement, eCurrency Mint defined the eCFA as "a high-security digital instrument that can be held in all mobile money and e-money wallets". The statement added it would secure "universal liquidity, enable interoperability, and provide transparency" to the "entire digital ecosystem" in the region.

Specific details of the digital currency have not been released, but both parties involved in the development of the eCFA stress it will be compatible with all existing payment platforms and will be equivalent in value to physical legal tender.

Shared responsibilities

Acting as the central bank for the region, the BCEAO will be responsible for overseeing the distribution of the currency, first in Senegal and then in Mali, Niger, Togo, Guinea-Bissau, Benin, Burkina Faso and the Ivory Coast, during the "second phase" of the launch. However, the issuance of the eCFA will be co-ordinated by BRM.

The digital currency will be issued "in accordance and compliance with e-money regulations" of the central bank.

Currently, only 20% of Africa's population has access to basic banking services, according to eCurrency. "A trusted electronic means of transacting is the ultimate instrument of financial inclusion," the statement said, explaining digital legal tender offers the general public a means by which to save and transact in a secure digital instrument.

"The mission of eCurrency is to preserve the secure and inclusive characteristics of physical fiat currency in our rapidly emerging digital world. We are realising this important mission in the West African Economic and Monetary Union region through the implementation of eCFA by BRM," says Jonathan Dharmapalan, founder and chief executive of eCurrency.

The eCFA will only be issued by authorised institutions, using cryptographic protocols to ward off counterfeiters.