20 May 2019

South Africa: The Rand Is Going Digital - and the Reserve Bank Is Open for Suggestions

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(file photo).
analysis

Central bankers have always been protective of the currencies they keep. Stability is a top priority, which has made them rather cautious about solutions that threaten that position. Yet, lately, they've thrown that caution to the wind as more regulators actively start experimenting with the idea of cryptocurrencies and the underlying blockchain technology. Even the SA Reserve Bank is warming up to the idea of digital currency. And it has asked the industry to help it come up with the best ideas.

Central banks are generally considered among the most prudent institutions in the world, but a report published in March 2019 by the World Economic Forum states that monetary authorities, perhaps surprisingly so, are some of the first adopters of distributed ledger technology (DLT).

The waters of blockchain are being tested at different levels though, and according to the World Economic Forum those actively investigating possibilities are all looking to win efficiencies, enhance security and find ways to include more people in the financial system on their banking and payments platforms.

SA's Project Khokha has two honourable mentions in the World Economic Forum report. It relates how in 2019 the SA Reserve Bank successfully executed payments over its wholesale...

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