South African Digital Rand On the Way

May 18, 2022 - Around 2 mins mins to read

According to a senior central bank official, a digital rand in South Africa might reduce the high cost of cross-border payments for banks, but its implementation is still a few years away.

South African Digital Rand On the Way

In an interview with Reuters, South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo said that regulation of crypto assets is in the works and may be implemented within nine to 15 months.

According to a 2021 World Bank analysis, remitting money from South Africa to another nation costs 13% of the transaction cost, which is more than nearly twice the average of the Group of 20 (G20) major global economies. The cost of delivering cash to South Africa is 6.2 percent.

Numerous governments are considering introducing electronic versions of traditional currencies, known as the central bank digital currencies (CBDCs), and are researching how the theoretical foundation may be utilized.

94672427 southafrcacurrency — *South African Rand*

The digital yuan initiative in China is the most advanced among big economies, while central banks from the eurozone to the United States are researching CBDCs at various levels. Nigeria’s central bank launched the eNaira last year for everyday use.

South Africa has experimented with a wholesale CBDC on a modest scale and engaged in a cross-border trial with the central banks of Malaysia, Australia, and Singapore. Regulators will then test the digital rand on a larger scale and create guidelines for its usage.

However, Naidoo stated that the South African Reserve Bank wants to regulate crypto assets to avoid theft, money laundering, and monetary policy undercutting and that it aims to have it in place within the next 15 months. He believes that if cryptocurrency assets become widely used, the central bank’s authority will be weakened.

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South African Digital Rand On the Way

According to a senior central bank official, a digital rand in South Africa might reduce the high cost of cross-border payments for banks, but its implementation is still a few years away.