cryptocurrency

Reserve Bank exploring the use of a digital currency – Business Day


“Such a SA CBDC would likely be legal tender, thus obligating merchants to accept it as payment for goods and services. The practical implications such designation would have, particularly for micro-, small- and medium-sized businesses, are now under consideration.”

Mboweni said the Reserve Bank is researching the broad range of implications such an issuance of a CBDC could have for areas including domestic financial stability; domestic and cross-border payments; the monetary policy transmission mechanism; the potential disintermediation that could occur and how that could affect traditional financial intermediaries such as banks; exchange rate volatility; capital flows and capital flow volatility; and financial inclusion.

“Most of these factors are, however, focused domestically, with the potential implications of a SA CBDC for the global monetary and financial system now not being regarded at this juncture,” Mboweni noted.

The minister said the Reserve Bank was not considering issuing a stablecoin or any other cryptocurrency, be it rand-backed or otherwise.

He explained that the bank and Treasury distinguished between the concepts of cryptocurrency, stablecoins and CBDC.        

He said a crypto-asset is a digital representation of value that is not issued by a central bank, but traded, transferred or stored electronically by natural or legal people used for the purpose of payment, investment or other form of utility for the user.

A stablecoin is a privately (non-central bank) issued cryptocurrency with a stability mechanism incorporated into its design with the aim of closely mimicking the value of a single sovereign currency, a basket of sovereign currencies, or another reference asset such as a commodity or even another crypto-asset.

The ultimate objective of the stablecoin, Mboweni said, was to address the widely documented challenges crypto-assets have had with limiting price volatility, which makes them unsuitable as a medium of exchange, a store of value and a unit of account.

ensorl@businesslive.co.za





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