South Africa is looking towards the establishment of regulations guarding digital assets and tokenized deposits. According to the statement of a senior figure at the premier bank in the country, the regulation could go live by 2025. Although the executive sees this news as a welcome development, he has warned that regulators need to understand the platform on which these assets are built to be able to regulate it.
South African Reserve Bank wants to create its CBDC
The South African Reserve Bank and some of the collaborators in the project have researched the distributed ledger technology. This has helped them figure out the risks attached to the use of the platform. The bank was also said to have conducted two kinds of research with diverse commercial banks across the country. In one of the research, the bank looked into the possibility of floating a retail CBDC.
According to the executive, the bank is also looking into the creation of a wholesale CBDC as it continues to intensify its research. While the bank has completed the research into the potential of the CBDC, it is still carrying out an internal review to consider which approach to the design it will take. However, several experts have suggested that the bank needs to work with regulators to address the skeptical approach from the public regarding digital assets.
Analyst draws up topics of concern
The report also included a detailed explanation of the benefits of a CBDC to the South African economy. In the explanation that was shared in the report, an executive of a commercial bank mentioned that it could be used to carry out interbank transactions. Asides from that, he noted that citizens could also leverage the retail CBDC to carry out their everyday transactions. The executive also noted that CBDCs could also help the country to check several issues including tax evasion and other issues.
However, he noted that the activities of the Central Bank could be called into question should the general public embrace the CBDC. Going further, he clarified that the public needs to be sensitized about how and in ways that the CBDC would benefit them. The executive also said that the Central Bank should also let people know where their funds will be held. He said that failing to clarify issues like this would present a bigger challenge to the people.
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