Senegal, in West Africa, will use a digital currency this year that will be circulated alongside paper money as legal tender.
The digital currency, eCFA, will be issued by the Banque Régionale de Marchés (BRM), and will be accepted by existing payment platforms such as MPesa, a mobile payments platform that allows people to transfer cash on their phones.
“An eCFA backed by our banking system and the central bank is the safest and most secure way to enable the digital economy. We can now facilitate full interoperability between all e-money payment systems”, said Alioune Camara, CEO of BRM.
The effort is a joint partnership with eCurrency Mint Limited, a company that helps central banks issue digital fiat currency.
The e-money will be issued in compliance with the Central Bank of the West African Economic and Monetary Union (WAEMU). In its second phase of roll out, the e-currency will be used in other countries in the union: Cote d’Ivoire, Benin, Burkina Faso, Mali, Niger, Togo and Guinea-Bissau.
The security features of paper money – watermark, serial number, and governor’s signature – can be replicated in a digital currency, said Jonathan Dharmapalan, CEO of eCurrency Mint at the 2015 Alliance for Financial Inclusion Global Policy Forum in Mozambique.
“By layering these together and binding them into a single instrument you have essentially created a central bank-issued digital currency”, he added.