The Bank of Ghana launches a regulatory Sandbox to boost innovation in the mainstream financial sector after testing its pilot phase.
Bank of Ghana launches its regulatory and innovation sandbox following a successful pilot implementation. The bank developed the sandbox in collaboration with EMTECH Solutions Inc.
This is in line with the bank’s objectives and technological aspirations. The Bank of Ghana pledged its commitment to continuously evolve the regulatory framework.
The Ghanaian Sandbox
The Bank of Ghana promised to evolve a conducive regulatory environment. Such an environment will foster innovation, financial inclusion and financial stability.
Ecedi, the Ghanaian digital currency possesses the ability to boost innovation in digital financial services in areas within the jurisdiction of the Bank of Ghana. When mainstreamed, eCedi, also improves the digitalization of the financial service industry.
Different aspects of the Ghanaian technology space play a key role in enhancing innovation. The adoption of emerging technologies such as machine learning, artificial intelligence and data analytics tools.
The technology space provides the people of Ghana with enormous opportunities for innovative products. Some of the innovative products include Know Your Customer (KYC) and Anti-Money Laundering (AML).
Others include fraud monitoring platforms, credit scoring for digital credit products and customer-centric product designs.
Blockchain Technology Leap
During the plot and over the past 2 years, the use of digital financial services recorded a remarkable increase. The remarkable increase emanated from enabling policies introduced by the bank.
The Bank of Ghana and the government brought it to light under the national digitalization agenda.
Consequently, the restrictions imposed on the movement of people during the pandemic spurred the adoption of digital financing. Digital financial services affected individuals, businesses, government ministries and agencies.
However, on the other end of the digital spectrum, blockchain seems to take a huge leap. Blockchain technology continues to feature in the mainstream financial sector.
The mainstream financial sector still deploys the technology, though prematurely.
Despite the slow adoption, the Bank of Ghana took the bold step of adopting the technology. The bank admitted a blockchain solution into its regulatory and innovation sandbox. Incorporating the technology in the sandbox pilot phase demonstrates a commitment to innovation.
Conditions for Sandbox Participation
The sandbox will serve as an enabling framework for small-scale live testing of innovations. The innovations will operate under a special exemption, allowance and time-bound exception.
The live testing of innovations will operate in a controlled environment under the regulator’s supervision. The sandbox aims to foster a deeper understanding of digital financial products and services. The regulatory sandbox is open to all licensed institutions.
With the regulatory sandbox in place, there is room for improvements to legal and regulatory requirements to absorb emerging technologies. The innovations need to satisfy three categories. Innovative and disruptive digital financial products, new and immature digital products and new business models not regulated.
Ghana’s crypto adoption rate
Ghana seems to be catching up with Nigeria and Kenya in crypto adoption rates in Africa. Both Nigeria and Kenya rank 11th and 19th positions on the Global Crypto Adoption Index. These two countries record strong adoption rates on the purchasing power and population, especially on the P2P exchanges.
P2P exchanges are crucial to Sub-Saharan Africa’s crypto economy. South Africa also ranks high in the adoption index at 30th.
Ghana is also pointed out as one of the regions in Sub-Saharan Africa where similar adoption levels are expected. Over the past year Paxful, a popular P2P exchange, recorded a total trade volume growth of nearly 100% in Ghana. The platform also recorded a trading volume growth of over 400% in the last two years in the same country. Such records reflect Ghana’s substantial growth in the crypto adoption space.
