Reserve Bank talks about the progress of the digital rand for South Africa

A digital rand in South Africa could reduce the high cost of cross-border payments for banks, says Juben Naidoo, deputy governor of the South African Reserve Bank (SARB).

talking with ReutersNaidoo said the introduction of a digital rand is at least a few years away, but hopes that regulation of crypto assets in South Africa will be in place within the next 15 months, to help prevent theft, money laundering and weakening. monetary policy.

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

In AprilReserve Bank Governor Letsetja Kganyago has called on regulators to err on the side of caution when considering developments related to cryptocurrencies before changing the rules.

Many countries plan to use digital versions of traditional currency, known as central bank digital currencies (CBDCs), to make sending money between central banks around the world more accessible and convenient.

According to a recent World Bank Report, South Africa remains the most expensive G20 country to send payments from. Remitting from the country costs an extra 13.02%. The report says that dispatch from Japan, the second most expensive country in the G20, was only 7.52% in the fourth quarter of 2021.

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

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

“We recognize that digital currency innovation cannot be explored in isolation. SARB continues to draw on insights emerging from various initiatives, including, but not limited to, our ongoing study of the feasibility, desirability and appropriateness of a retail central bank digital currency (CBDC) to enrich the our understanding of the implications of digital currency. ”Kganyago said.

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

international trends

Other countries are also planning to introduce electronic versions of the traditional currency, Naidoo said.

“China’s digital yuan project is the most advanced of the major economies, through central banks from the euro zone to the United States that are changing the stages of research on 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 banks, allow more remittances and grow the economy.

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