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The South African Reserve Bank has started preliminary research into central bank digital currencies.
South Africa is the most recent nation to investigate the prospect of developing its own independent digital currency.
According to a release issued on Tuesday, the South African Reserve Bank has begun preliminary feasibility studies about the “desirability and appropriateness” of a retail central bank digital currency.
As part of its announcement, the SARB defined a retail CBDC as a cash-complimentary sovereign digital currency issued by the central bank suitable for electronic payments.
“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,” South Africa’s central bank stated in its announcement.
According to the SARB, the preliminary study will focus on issues surrounding a potential CBDC issuance for retail use in South Africa:
“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.”
South Africa’s CBDC trial is scheduled to run until 2022, and it could overlap with the current institutional digital payments pilot known as “Project Khokha.”
The SARB, like other central banks researching CBDCs, clarified that its latest exploratory experiments were in no way indicative of potential efforts to issue a digital rand.
The SARB launched a pilot test for Project Khokha, the country’s tokenized fiat interbank payment scheme, in June 2018. As previously stated by Cointelegraph, the project will explore digital clearing and transactions for interbank transfers using the Ethereum-based Quorum infrastructure.
The global CBDC sector is expanding, with China seen as the de facto champion, at least among major economies. In South Korea, the central bank recently announced plans to collaborate with a technology company to develop a sovereign digital currency for testing protocols that will begin in August.