South Africa's central bank mulls digital rand

The South African Reserve Bank is mulling the issue of a digital rand, according to the central bank's Deputy Governor Kuben Naidoo.

Naidoo said that a digital rand could cut the cost of cross-border payments for banks. He said that the central bank is still years away from introducing the digital rand.

Cross-border remittances from South Africa cost 13% of the transaction amount. According to a World Bank report, this price is more than double the average cost of sending money out of the Group of 20 G 20 top global economies. The cost of sending money into South Africa is 6.2%.

This news comes after South Africa conducted small-scale experiments with a wholesale central bank-issued digital currency, CBDC, in 2021. The central banks of Australia, Singapore, and Malaysia have teamed up to run a cross-border pilot.

Before the development of the digital rand can go any further, regulators must test it on a larger scale and create a legal framework for its use. Naidoo said that SARB is still learning and experimenting.

South Africa is taking its time in creating a digital rand, but it is expediting the regulation of cryptanalyms. Naidoo said that the regulation of criptocurrency is on the way and could arrive within the next nine to 15 months.

Naidoo said that the rush to regulate the nascent asset class was a factor in the rush to regulate it.

Different countries take different approaches to CBDC development.

This news comes as several countries across the globe are exploring the possibility of launching a CBDC. The Israeli central bank was given the public go-ahead to launch a digital shekel earlier this month. The central bank is yet to decide whether or not it will issue a CBDC.

China is pushing full steam ahead with its CBDC plans, unlike Israel, who seems hesitant about a digital shekel. The country launched the pilot versions of digital yuan wallets for Android and iOS devices earlier this year. It also tested its CBDC during the Winter Olympics. It has yet to announce an official launch date for its digital currency.

According to data provided by CBDCtracker, only two countries have launched CBDCs - Nigeria, with its e-Naira and the Bahamas Sand Dollar.