The South African Reserve Bank (SARB) says it has commenced a feasibility study for a general-purpose retail central bank digital currency (CBDC). The study, which the SARB expects to conclude in 2022, will focus on the issuance of a domestic CBDC that can be used by consumers in South Africa for general retail purposes.
Study to Focus on Retail CBDC
In a statement released on May 25, 2021, the central bank says the feasibility study will include practical experimentation across different emerging technology platforms. The study will take into account a variety of factors, including policy, regulatory, security, and risk management implications.
Still, the statement clarifies that this latest study will be distinct from the previous one. The statement explains:
However, the SARB has downplayed the possibility of it launching digital currency in the near future. It said it has â€œmade no decision to issue a retail CBDC.â€
CBDCs and the SARBâ€™s Mandate
In 2017, the SARB created a simulation (Project Khokha) to assess if the performance, scale, and confidentiality of payments were possible utilizing the Ethereum blockchain technology. This simulation reportedly â€œexceeded the transaction performance target at 70,000 transactions in less than two hours.â€
Additionally, the simulation achieved a â€œ95% block propagation time in less than 1 second and 99% propagation in less than 2 seconds.â€ The results demonstrated that â€œacceptable performance is achievable, despite the geographical distribution of the banksâ€™ hardware.â€ Concerning its latest feasibility study, SARB says this will also consider how the issuance of a general-purpose CBDC will feed into the central bankâ€™s policy position and mandate.
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