The South African Reserve Bank (SARB) has begun exploring the possibility of creating its own sovereign digital currency.
It has been reported that the bank has begun preliminary feasibility studies about the “desirability and appropriateness” of a retail central bank digital currency.
However, the SARB defined a retail CBDC as a cash-complimentary sovereign digital currency issued by the central bank suitable for electronic payments.
South Africa’s central bank stated in its announcement:
“The objective of the feasibility study is to consider how the issuance of a general-purpose CBDC will feed into the SARB’s policy position and mandate.”
The report said that according to the SARB, the preliminary study will focus on issues surrounding a potential CBDC issuance for retail use in South Africa.
The bank further stated:
“The feasibility study will include practical experimentation across different emerging technology platforms, taking into account a variety of factors, including policy, regulatory, security and risk management implications.”
Likewise, South Africa’s CBDC study is expected to last until 2022 and will potentially align with the existing institutional digital payments pilot under the aegis of “Project Khokha.” Like other central banks currently studying CBDCs, the SARB also stated that its current exploratory studies were in no way an indication of plans to issue a digital rand in the future.
South Africa joins the CBDC race as the central bank begins preliminary studies on a possible digital rand. https://t.co/TNscInxRYc — Cointelegraph (@Cointelegraph) May 25, 2021
In June 2018, the SARB launched a pilot test for Project Khokha, the country’s tokenized fiat interbank payment system. As previously reported, the project utilizes the Ethereum-based Quorum infrastructure to test digital clearing and settlements for interbank payments.
The global CBDC field continues to expand, with China seen as the de facto leader, at least among the major economies.
Thus, in South Korea, the country’s central bank recently announced plans to partner with a technology firm to build a sovereign digital currency for its testing protocols scheduled to begin in August.