Reserve Bank talks on digital edge progress for South Africa

A digital rand in South Africa could cut the high cost of border payments to banks, says Juben Naidoo, Deputy Governor of the South African Reserve Bank (SARB).

Speaking against ReutersNaidoo said the introduction of a digital edge is at least a few years away, but he hopes the regulation of cryptocurrencies in South Africa will be in place within the next 15 months, to help prevent theft, money laundering, and the undermining of monetary policy.

“If cryptocurrencies were to become a very ubiquitous currency, you could undermine the authority of the central bank,” he said.

In Aprilthe Reserve Bank’s governor, Letsetja Kganyago, called on regulators to fail on the side of caution when considering crypto-related developments before changing the rules.

Many countries have plans to use digital versions of traditional currencies, known as central bank digital currencies (CBDCs), to make the transfer of money between central banks around the world more accessible and affordable.

According to a recent World Bank Report, South Africa remains the most expensive G20 country to send out payments. Surrendering the land costs an additional 13.02%. The report stated that shipping from Japan, the second most expensive G20 country, was only 7.52% in Q4 2021.

The government is actively experimenting with digital currency through Project Khokha 2 which aims to explore the use of tokenized money, blocks and digital currency in South Africa.

Absa, FirstRand, Investec, the JSE, Nedbank and Standard Bank are all part of Project Khokha 2, testing blockchain technology to accelerate payment systems in the country.

“We recognize that innovation in digital currency cannot be explored in isolation. The SARB continues to draw on the insights that emerge from various initiatives, including – but not limited to – our ongoing study into the usefulness, desirability and suitability of a digital currency for retail central bank (CBDC) to enrich our understanding of the effects of digital currency, said Kganyago.

Naidoo pointed out that South Africa has conducted a small pilot experiment across the border with other countries, namely: Malaysia, Australia and Singapore.

International trends

Other countries are also planning to introduce e-versions of traditional currency, Naidoo said.

“China’s digital yuan project is the most advanced among large economies, with central banks from the eurozone to the United States undergoing several stages of research into CBDCs.”

Last year, Nigeria became the first African nation to launch a digital currency when its central bank introduced eNaira for use by the average consumer.

According to Reuters, Nigeria’s move was to expand access to bankers, enable more remittances and grow the economy.

To read: Reserve Bank increases rates by 50 basis points

Reserve Bank talks on digital edge progress for South Africa

Source link Reserve Bank talks on digital edge progress for South Africa

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