The South African Reserve Bank has launched a study on the feasibility of a central bank digital currency (CBDC) as “complementary to cash.” The study, which is expected to be concluded in 2022, will investigate how a retail CBDC would impact the bank’s policy position and mandate.
In its announcement, the SARB revealed that the study would look into the “feasibility, desirability and appropriateness of a central bank digital currency (CBDC) as electronic legal tender, for general-purpose retail use, complementary to cash.”
South Africa joins a steadily growing number of central banks globally that are studying CBDCs as they look to keep up with the times. As CoinGeek reported, the latest bank to make a move was South Korea’s which announced it was seeking a technology partner for the move. Some banks like the Bahamas have already launched their CBDCs.
As with most central banks, the SARB is studying how a digital rand would affect its monetary policies. Many regulators are concerned that a CBDC would erode their ability to implement these polices to stabilize the market. The U.S. Federal Reserve is one of these; with chair Jerome Powell recently stating that a CBDC would require “careful thought and analysis—including input from the public and elected officials.”
The SARB 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.”
This study will conclude in 2022, it revealed. The apex bank also sought to clarify that at this stage, it hasn’t made any decision to issue the CBDC and was merely just studying the field.
The SARB is just one of the many central banks to announce CBDC feasibility studies recently. In one of the most significant moves in the sector, the Norwegian central bank revealed it was considering the BSV enterprise blockchain as a viable platform for its CBDC. This would be the first time a central bank has used a public decentralized blockchain to issue a CBDC. Even more significantly, it was proof that BSV blockchain had proven itself to be one of the most attractive solutions in the market.
Some of the other recent CBDC announcements have come from Mauritius and Indonesia. In the former, the central bank is looking to kick off a CBDC pilot by the end of the year. Speaking at a recent industry event, the Bank of Mauritius governor Harvesh Seegolam revealed it had been working with the International Monetary Fund on the project.
Elsewhere, the Bank of Indonesia has revealed that it’s looking to launch a CBDC and is assessing which platform to use. Governor Perry Warjiyo said the recent boom in digital payments had necessitated the digital rupiah.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain
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