According to an expression of interest (EOI) that was issued on April 29, 2019, the South African Reserve Bank (SARB) is said to conduct a central bank digital currency (CBDC) feasibility study. The South African Reserve Bank is passing through this EOI in finding solution providers to offer technological infrastructure and skills to the project.
What is the CBDC Feasibility Project Character all about?
The CBDC Feasibility project was developed back in May 2018. It aims to investigate the desirability and feasibility of central bank issued digital currency to be used as electronic legal tender as a complimentary means to physical cash.
In addition, we can say that the purpose of the feasibility project will be finding out how issuing a CBDC can efficiently support SARB’s vision of leading as it meets the economic well-being of inhabitants of South Africa. It is worth noting that they’ll serve the economic well-being of South Africans by striving for price and financial stability.
The establishment of this project comes as a result of a mandate that the Currency Management Department of the SARB issued in 2016. The order required that the selected team carryout a serious investigation on the case of CBDC issued and backed by SARB.
According to the expression of interest, it is believed that the CBDC feasibility project will be carried out in an innovation lab environment. The innovation lab environment will comprise of technical skills, software, infrastructure, and business skills. However, SARB has made it clear to everyone that the CBDC feasibility project has an exploratory nature and does not constitute any guarantee or long-term plan committed to issuing a government-backed cryptocurrency.
Below are some of the main CBDC policies worth knowing:
- CBDC transactions must be free or low-cost to consumers
- Only SARB must issue the CBDC as legal tender
- Must enable the issuance and distribution of CBDC to commercial banks or licensed service providers
- Commercial banks must issue the CBDC under SARB’s regulatory oversight
- CBDC must be issued on a one-on-one parity with the rand
- CBDC must provide an incentive to increase its use
- Consumers must be able to make transactions with CBDC without the need for a bank account
- CBDC must be accepted as a means of payment by all businesses and the government
- It should be possible to cancel a CBDC serial number that is proven to be a counterfeit
- CBDC must not be easily counterfeited
- CBDC must be scalable