The South African Reserve Bank is to conduct a feasibility study for a general-purpose retail central bank digital currency (CBDC).
Like other central banks around the world, the Sarb says it wants to investigate the “feasibility, desirability and appropriateness” of a CBDC as electronic legal tender, complementary to cash.
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.
In June 2018, the Sarb released details of ‘Project Khokha’, a proof of concept designed to simulate a ‘real-world’ trial of a distributed ledger technology (DLT)-based wholesale payment system.
The project was built on Quorum, using Istanbul Byzantine Fault Tolerance (IBFT), Pedersen commitments and range proofs to deliver on the combination of scalability, resilience, confidentiality and finality.
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Despite the positives, the report noted that “there are many issues to consider before the decision to take a DLT-based system into production can be taken. Some of these issues relate to the practicalities of implementation, but also to legal and regulatory factors and to the broader economic impact.”
The Sarb says that combining the results of Project Khoka with the new study into the retail market will result in better policy alignment and coordination.
The CBDC feasibility study is expected to be concluded in 2022.