South Africa’s Central Bank Starts Research on Retail-Focused Digital Currency

A feasibility study from the South African Reserve Bank (SARB) will examine the pros and cons of a central bank digital currency (CBDC).

• In an announcement Tuesday, SARB said the work would look at the "feasibility, desirability and appropriateness" of a retail CBDC as legal tender.
• It would be focused on a digital rand used to complement cash.
• The overriding purpose of the study is to see if the potential issuance of the general-purpose retail CBDC would align with SARB's mandate and policies as central bank.
• Practical experiments will take place on unnamed "different emerging technology platforms" and gauge any implications for policy, regulation security, risk management and other factors.
• The central bank has been working on a blockchain-based system for interbank clearance and settlement since at least 2018, claiming in that year to have had spectacular success with a proof-of-concept project.
• Around the same time, SARB said it was to trial the Quorum blockchain (then owned by JPMorgan) in interbank clearing and settlement.
• A number of other central banks globally are also looking into potential retail CBDC launches, with blockchain infrastructure firm Bison Trails recently putting the number at 80%.

Also read: Opinion: A Central Bank Digital Currency Would Be Bad for the US