South African Reserve Bank considering a national digital currency

The South African Reserve Bank (Sarb) is open to issuing a national digital currency, which would likely be based on Blockchain or Distributed Ledger Technology (DLT) according to a 2 February report by Moneyweb.

“If we go the route of issuing a digital currency, the objective would be to take advantage of emerging technologies so that we reap the benefits,” said Tim Masela, head of the National Payments System at the Sarb.

Currently, African nations are leading the way on digital currencies with Tunisia said to be the only nation to have successfully issued a digital currency. In addition, a digital version of the West African franc is expected to begin rolling out in Senegal later this year.

These digital currecnies makes sense, said Masela, because of their convenience of use, a wide reach, real-time settlements and a reduced cost of use. However, Sarb is also mindful of the risks of a crypto-currency highlighting possible cyber-attacks and unregulated nature of the emerging business models as the biggest concerns.

“We foresee that these benefits could be realised, which would be good for the transacting public. But of course, the risks have to be borne in mind as well and that’s what we want to balance.”

“The proponents of the technology say ‘you don’t need to regulate it; it will self-regulate’. We don’t have an idea of how that will happen, we still need to reflect on this and need a good case [to show] that it can self-regulate. Otherwise, we believe that if it is not regulated and things go wrong, it could have a spillover effect into the financial systems,” he said.

Read: The reality of disposable income in South Africa – we’re getting poorer

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South African Reserve Bank considering a national digital currency