The Rainbow nation has taken the bull by the horn and could become a hub for digital currency transactions. The South African Reserve Bank (SARB) is studying the benefits of issuing a digital currency for general retail use, it said on Tuesday, in line with several other progressive central banks.
A central bank digital currency, or CBDC, is a form of electronic cash linked to the sovereign currency on a one-to-one basis, with its value protected by the central banks’ monetary policy and inflation-targeting regime.
It would allow businesses, and individuals to make electronic payments directly backed by the federal bank.
The SARB said it would “investigate the feasibility, desirability and appropriateness of a central bank digital currency (CBDC) as electronic legal tender, for general-purpose retail use, complementary to cash.”
The objective of the study is to consider how the issuance of a general-purpose CBDC would feed into the Sarb’s policy position and mandate, it said.
The study, should be concluded in 2022. It would include practical experimentation across different emerging technology platforms, considering a variety of factors, including policy, regulatory, security and risk management implications.