Date: 29 April, 2024
The South African Reserve Bank (SARB) has unveiled its forward-looking digital payments roadmap, prioritizing stablecoins, a retail central bank digital currency (CBDC), and tokenization as key areas of focus.
Aligned with SARB’s National Payment System Framework and Strategy: Vision 2025, the roadmap aims to bolster financial inclusion, enhance cost-effective payments, promote interoperability, and foster innovation and competition within the financial sector.
Despite a commendable 82% financial inclusion rate among adults in South Africa, usage statistics reveal room for improvement, with over 70% of account holders utilizing their accounts only once a month. Factors such as high fees, a preference for cash transactions, and financial constraints contribute to this trend, making the promotion of digital payments a critical agenda for SARB.
One notable initiative is the exploration of a digital rand, with a feasibility study for a retail CBDC initiated in May 2021. The ongoing roadmap pledges continued exploration over the next two years, focusing on the potential impact on payments, monetary policy, and broader financial services.
Digital assets also feature prominently in SARB’s strategy, with South Africa emerging as a prominent digital currency hub alongside Nigeria and Kenya. Innovations such as Centbee’s digital currency onboarding have facilitated direct payments for utilities, groceries, and transportation services.
While digital assets do not hold legal tender status, SARB has refrained from prohibiting their use for payment purposes and remains open to integrating stablecoins into its regulatory sandbox. This sandbox approach enables SARB to evaluate payment use cases and their potential to boost digital payment adoption, contributing to the formulation of a comprehensive regulatory framework.
Guided by recommendations from the Financial Stability Board (FSB), SARB is actively developing a regulatory approach to digital assets, although the Financial Sector Conduct Authority (FSCA) has assumed a primary role in digital asset regulation. Notably, the FSCA recently issued its inaugural batch of Virtual Asset Service Provider (VASP) licenses to prominent exchanges like VALR and Luno, signaling a progressive stance towards digital asset oversight and compliance.
Key Points:
- SARB unveils a digital payments roadmap focusing on stablecoins, CBDC, and tokenization.
- Aligned with Vision 2025, aims include financial inclusion, cost-effective payments, and innovation.
- Despite high inclusion rates, usage statistics reveal low account utilization.
- Exploration of digital rand and feasibility study for retail CBDC ongoing.
- Digital assets, though not legal tender, are actively utilized in South Africa’s digital currency landscape.
- SARB is open to integrating stablecoins into the regulatory sandbox for payment use case evaluation.
- Regulatory approach to digital assets guided by FSB recommendations; FSCA leads digital asset regulation.
- The recent issuance of VASP licenses to exchanges like VALR and Luno showcases progressive oversight.
Reference
https://coingeek.com/south-africa-digital-payments-roadmap-includes-cbdc-stablecoins/