The South African Reserve Bank (SARB) is making steady progress in its investigations around a central bank digital currency, says deputy governor Kuben Naidoo.<\/p>\n
Speaking in PSG\u2019s latest Think Big webinar, Naidoo said the SARB is intimately involved with ‘Project Dunbar’ \u2013 an initiative that brings together the Reserve Bank of Australia, the Central Bank of Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank for a cross border central bank digital currency.<\/p>\n
Naidoo said the SARB\u2019s aim is to improve the efficiency of the local payment system \u2013 bringing down costs and the time that it takes to clear and settle in the payment system. He predicts that a central bank digital currency would most likely be used for cross-border payments, either for goods and services or remittances, but this will take ‘several years before it becomes a reality.”<\/p>\n
The South African Reserve Bank has previously tested a digital currency for local use as part of its Project Khoka programme, which looked at using blockchain technology to speed up payment systems in the country.<\/p>\n
The rapid growth of cryptocurrencies \u2013 which are distinct from digital currencies issued by central banks \u2013 is posing a potential threat to existing monetary regimes and adding urgency to debates on handling cross-border money transfers.<\/p>\n
Speaking on the projects in April, SARB governor Lesetja Kganyago said\u00a0that digital currency innovation cannot be explored in isolation.<\/p>\n
“The SARB continues to draw on the insights emerging from various initiatives, including (but not limited to) our ongoing study into the feasibility, desirability and appropriateness of a retail central bank digital currency (CBDC), to enrich our understanding of digital currency implications.\u201d<\/p>\n