South Africa may soon add its name to the list of countries to pilot the creation of a national cryptocurrency, otherwise known as Central Bank-backed Digital Currency (CBDC)
In the past week, the South African Reserve Bank (SARB) held a meeting to deliberate on the possibilities of a CBDC.
The meeting was a followup up on an earlier notice on SARB's website where it invited prospective solution providers to a meeting in anticipation of a feasibility project for the issuance of the central bank digital currency issued and backed by the South African Reserve Bank.
In a recap about the outcome from the meeting which lasted over an hour, the SARB reported well on the potential of cryptocurrencies to play a significant part in commerce, thus, reducing the financial burden involved in the issuance of fiat. The possibility of achieving financial inclusion through the issuance of national cryptocurrencies was also considered as one of the merits of the payment tool.
Aside from the benefits, however, the banking authority also deliberated on possible obstacles that could kick against the plan to issue a national cryptocurrency.
Among other things, the SARB acknowledged in line with remarks made by Bank for International Settlement (BIS) Chief Agustin Carstens that a CBDC will significantly affect the operation of commercial banks since citizens under a CBDC model directly gain access to the central bank. Additionally, the SARB said it would also have to figure out how to distribute the proposed cryptocurrency in a way that does not affect the national fiat currency.
The SARB on a final note called for more stakeholders and local firms to collaborate with them to the extent possible to execute the project currently considered to be in a ‘feasibility’ stage.
Meanwhile, the new plans of a cryptocurrency by the South African Reserve Bank (SARB) have come at a time when the nation hopes to enact regulations for the cryptocurrency industry.