Central Bank's Stance on Retail CBDC
The South African Reserve Bank (SARB) has stated that it does not foresee an immediate need for a central bank digital currency (CBDC) in the near future. Instead, the bank believes the country should focus on modernizing its existing payments system.
In a paper released on Thursday, the SARB indicated that there is no "strong immediate need" for a retail CBDC, although it acknowledged that deploying one is technically feasible. The bank emphasized that current initiatives, such as a program aimed at modernizing the payments system and increasing non-bank participation in the national payment system, should remain the primary focus for the time being.
"While the SARB does not currently advocate for the implementation of a retail CBDC, it will continue to monitor developments and will remain prepared to act should the need arise."
The central bank plans to redirect its attention towards exploring wholesale CBDC applications and enhancing cross-border payment efficiency. Concurrently, it will continue to monitor the evolving landscape of retail CBDC developments.
Addressing Financial Inclusion and Crypto Risks
The SARB's research investigated whether a retail CBDC could effectively address existing gaps in South Africa's payment system. The findings highlighted that challenges persist, with approximately 16% of the adult population remaining unbanked.
For any CBDC to be successful, it would need to offer benefits comparable to or exceeding those of cash. These benefits include offline functionality, universal acceptance, low transaction costs, ease of use, and robust privacy features, according to the bank's assessment.
South Africa has recently adopted a more cautious approach towards cryptocurrencies. The central bank has issued warnings concerning crypto assets and stablecoins, identifying them as a new risk associated with technology-enabled financial innovation.
In a report published earlier this week, the SARB specifically flagged "crypto assets and stablecoins" as a potential threat. The bank also cautioned that cryptocurrencies could be utilized to circumvent the country's Exchange Control Regulations, which govern the movement of funds into and out of South Africa.
Global CBDC Landscape
Globally, the development and adoption of CBDCs are progressing at varying paces. According to the Atlantic Council's CBDC Tracker, only three countries have officially launched a CBDC: Nigeria, Jamaica, and The Bahamas.
Beyond these launches, 49 countries are currently in the pilot testing phase for their CBDCs, while 20 countries are actively engaged in development. An additional 36 countries are in the research phase for their respective CBDC projects. In contrast, the United States has reportedly shelved its CBDC plans, particularly during the Trump administration.
