The South African Reserve Bank (SARB) has begun a study to investigate how a central bank digital currency (CBDC) would work for general purpose retail use alongside cash, according to a press release.
A retail CBDC is a digital form of cash which works to combine the best aspects of both cash and digital payments, the release stated.
With the study, SARB will investigate how a CBDC would impact its policy position and mandate, according to the release. The study will look at how a CBDC can be implemented practically across various tech platforms. It will take into account several factors, including policy, regulatory, security and risk management implications.
This CBDC feasibility study is different from Project Khokha, which is looking into the settlement of high-value transactions among the commercial banks and other stakeholders, the release stated. Both studies should produce better policy alignment and coordination.
The cryptocurrency market, known for its volatility, has attracted the attention of both investors and the biggest banks in several countries. Central bankers in the U.S., China, India and Europe, among others, have begun looking into the form of currency.
That has sometimes led to harsh measures against the usually-free cryptocurrency market. In India, gateways like Paytm and others have forbidden transactions on cryptocurrency exchanges, so as to make room for the CBDC being developed by the central bank.
This comes in spite of the country’s Supreme Court ruling that allows banks to interact with crypto services and players.
But the country could be looking at a rule to outright ban crypto services. India’s central bank’s push is in line with others globally as China’s central bank said cryptos aren’t real.