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More countries are now exploring the possibility of issuing their own central bank digital currencies. The latest to join the trend is South Africa, which recently announced that its central bank has started a feasibility study for a general-purpose retail central bank digital currency.
The South African Reserve Bank (SARB), the country’s central bank, announced on Tuesday that the study will look at the “of a retail central bank digital currency as legal tender. In its press release, the SARB defined a retail CBDC as the digital form of cash, which will combine the best attributes of both electronic payments and cash.
The monetary authority said that the feasibility study will focus on potential issues that might come up with the issuance of a retail CBDC that will be used by South African consumers. However, the monetary authority clarified that it has not yet decided if it will actually issue a CBDC.
“The objective of the feasibility study is to consider how the issuance of a general purpose CBDC will feed into the SARB’s policy position and mandate,” the central bank wrote. “The SARB is one of a growing number of central banks looking at the feasibility of the issuance of digital currencies.”
The CBDC, which is expected to last until 2022, will involve experimentations on various aspects of the project. “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,” the SARB said.
The announcement also mentioned that the CBDC project might align with an existing institutional digital payments pilot. “It should be noted that while the CBDC feasibility study is different from Project Khokha, which focuses on the settlement of high-value transactions between commercial banks and other stakeholders at the wholesale level, it is expected that the two studies will result in better policy alignment and coordination,” the SARB added.
The SARB launched a pilot test for Project Khoka, the country’s tokenized fiat interbank payment system, back in June 2018, Cointelegraph reported. The project is aimed at testing digital settlements and clearing for interbank payments on the Quorum infrastructure.
