By Joshua Worlasi AMLANU
As nation traverse a challenging economic period characterized by inflation and currency depreciation, stablecoins are emerging as a viable solution for promoting financial inclusion and economic empowerment.
These digital currencies, designed to maintain a stable value by being pegged to assets such as fiat currencies or commodities, could offer an innovative way to mitigate some of the country’s pressing economic concerns.
Unlike volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins such as Tether (USDT) and USD Coin (USDC) are designed for price stability. This makes them more practical for everyday financial activities, including payments, savings, and remittances. Their stability is ensured by reserves held by issuing entities, maintaining a 1:1 ratio with their underlying asset.
Gillian Darko, Chief of Staff and Director of Strategy at Yellow Card, recently in an interview highlighted the transformative potential of stablecoins in Ghana during an interview.
“Stablecoins are more than just a financial innovation—they represent a pathway to greater economic participation for millions of Ghanaians,” she explained. “They offer practical solutions for financial inclusion, especially for the unbanked, and they’re a hedge against inflation in countries like Ghana where currency depreciation can erode the value of savings.”
Ms. Darko pointed to mobile money’s widespread adoption in Ghana as a key precedent for the rapid acceptance of digital financial tools.
“When I returned to Ghana four years ago, I was amazed by how mobile money had revolutionized payment systems. It was a game-changer for financial transactions, especially for those without access to traditional banking. Stablecoins, I believe, are the next step in this evolution. They have the potential to bring even more people into the financial system while offering protection against the volatility of the local currency.”
Stablecoins also hold promise for cross-border transactions, an area where traditional remittance systems often fall short due to high costs and slow processing times. By providing a faster and more cost-effective alternative, stablecoins can significantly reduce transaction costs for Ghanaians sending money back home or conducting international trade.
“In addition to their practical benefits, stablecoins could empower individuals and small businesses by enabling them to save and transact in a currency that maintains its value,” Ms. Darko noted. “This is especially critical for those living in regions with high inflation or unstable local currencies.”
Financial Inclusion
Ms. Darko emphasized that financial inclusion is one of the most significant advantages of stablecoins. She highlighted how these digital currencies address a gap that traditional banking systems have struggled to fill, particularly for underserved or unbanked populations.
“Stablecoins listen to the customer by providing more financial choices and the ability to utilize money in ways they prefer,” she remarked.
Unlike conventional banking, stablecoins allow individuals to access secure and efficient financial systems using only a mobile phone or internet connection. This accessibility fosters broader economic participation, reduces inequality, and empowers communities.
“At Yellow Card, we are focused on providing financial infrastructure for those who need it most,” Ms. Darko added, emphasizing the company’s customer-centric approach.
She pointed out that financial inclusion isn’t just about technology but about understanding and addressing the unique challenges faced by individuals without access to traditional banking.
Stablecoins’ role in financial inclusion could prove transformative for rural and low-income communities, where access to financial services remains limited. By bridging this gap, these digital currencies not only provide practical financial tools but also promote economic growth and resilience in underserved areas.
Lower Transaction Costs
Ghana, like many African countries, faces some of the highest remittance costs globally. Traditional banking systems impose steep fees on services such as international transfers, currency exchange, and even local transactions. Stablecoins and blockchain technologies help reduce these costs by cutting out intermediaries and enabling near-instantaneous peer-to-peer transfers.
“Stablecoins lower these costs, particularly for cross-border payments,” Ms. Darko explained. “This affordability enhances accessibility and facilitates economic activities.”
She pointed to YellowPay, a platform that allows users to purchase stablecoins like USDT and USDC for sending money across borders at reduced costs. “YellowPay has gained traction in 20 African countries, providing a cost-effective alternative for remittances,” she added.
Hedging Against Inflation
Inflation hedging is vital in economies facing currency devaluation or hyperinflation. Stablecoins, pegged to stable currencies like the US dollar or commodities such as gold, offer individuals and businesses a way to preserve wealth and maintain financial stability.
In Ghana, with inflation at 22.1 percent and the cedi depreciating near GH¢17 to US$1, stablecoins provide a solution for safeguarding value. “Since returning to Ghana, I’ve seen the cedi’s value decline,” Ms. Darko said. “Stablecoins help users retain their money’s value by converting it into a stable digital asset pegged to currencies like the US dollar.”
Complementing Ghana’s Digital Currency Initiatives
Ms. Darko discussed how stablecoins complement the Bank of Ghana’s central bank digital currency (CBDC) initiative, clarifying that Yellow Card isn’t competing with the central bank but rather supporting its goals.
“We are agnostic toward specific stablecoins and not taking business away from local currencies,” she said.
She explained that both stablecoins and the e-cedi aim to enhance financial inclusion, improve efficiency, and promote a cashless economy.
“Stablecoins provide a bridge, complementing the central bank’s goals and helping users experience the benefits of digital currencies,” Ms. Darko added.
Building Trust with Regulators
Ms. Darko highlighted Yellow Card’s proactive approach to working with regulators across Africa. In Ghana, this collaboration has included engaging with the Bank of Ghana to align their operations with local policies.
“When the Bank of Ghana released its draft digital assets guidelines in August, I was incredibly excited,” she said, noting the opportunity for more conversations around the benefits of stablecoins, and that Yellow Card was pleased to submit a detailed set of comments and observations on the draft guidelines to the Bank of Ghana.
Yellow Card’s operations extend beyond Ghana to 19 other countries on the continent. Yellow Card is registered with Ghana’s Financial Intelligence Centre, and the company holds VASP licenses and/or AML registrations in Nigeria, South Africa, Botswana, Zambia, Uganda and Tanzania, as well as the EU and the United States.
She explained that their priority is to create a safe environment for customers while ensuring compliance with local regulations.
