South African central bank to study use of digital currency

PUBLISHED: Tue, 25 May 2021 14:13:00 GMT
Promit Mukherjee
An embossed logo of South Africa’s Reserve Bank sits on a document folder during a news conference with Lesetja Kganyago, governor of South Africa’s reserve bank, in Pretoria, South Africa, on Thursday, Nov. 20, 2014. Reserve Bank Governor Lesetja Kganyago kept South African borrowing costs unchanged in his debut policy meeting as Reserve Bank governor, reinforcing his pledge for continuity. Photographer: Dean Hutton/Bloomberg via Getty Images

JOHANNESBURG, May 25 (Reuters) – The South African Reserve Bank (SARB) is studying the benefits of issuing a digital currency for general retail purposes, it said on Tuesday, in line with several other central banks.

A central bank digital currency, or CBDC, is a form of electronic cash linked to the sovereign currency on a one-to-one basis, with its value protected by the central banks’ monetary policy and inflation-targeting regime.

It would allow businesses and individuals to make electronic payments directly backed by the federal bank.

The SARB said it would “investigate the feasibility, desirability and appropriateness of a central bank digital currency (CBDC) as electronic legal tender, for general-purpose retail use, complementary to cash.”

The objective of the study is to consider how the issuance of a general-purpose CBDC would feed into the SARB’s policy position and mandate, it said.

The study, to be concluded in 2022, will include practical experimentation across different emerging technology platforms, taking into account a variety of factors, including policy, regulatory, security and risk management implications.

(Reporting by Promit Mukherjee. Editing by Mark Potter)

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