South Africa to test CBDC in retail payments

The South African Reserve Bank (SARB) will study the feasibility of issuing a general‑purpose retail CBDC. The regulator will complete the techno-economic justification for the project in 2022.

According to the press release, the central bank will assess the “feasibility and appropriateness” of using a central bank digital currency (CBDC) as legal tender.

SARB regards CBDC as a new form of money that will complement fiat. The digital rand is intended to combine the advantages of cash and electronic payments.

The central bank will test the new instrument on unnamed technology platforms. As part of the study, it will examine a range of issues, including those related to regulatory oversight, security and potential risks.

The regulator stressed that a decision on launching a CBDC has not yet been taken.

In 2018, the SARB began developing the interbank clearing system Project Khokha on the JPMorgan Quorum blockchain platform. The development of the latter is now undertaken by the company ConenSys.

The SARB noted that the CBDC project differs from Project Khokha. In its view, the two studies will help coordinate policy around the instrument more effectively.

Earlier, the Bank of Korea began selecting a technical partner for launching the digital currency. The regulator will run a pilot from August to December 2021.

Lael Brainard said that the agency is expanding its work with CBDC, paying particular attention to financial and geographical integration.