EPaper

Digital rand may cut cost of cross-border payments

Rachel Savage and Promit Mukherjee

A digital rand in SA could cut the high cost of cross-border payments for banks.

However, the introduction of this mechanism is still a few years away, said Reserve Bank deputy governor Kuben Naidoo. But regulation of crypto assets is in the offing and it might come into force within nine to 15 months, he said.

It costs 13% of a transaction to remit money from SA to another country.

That is more than double the average of the Group of 20 (G20) leading global economies, according to a 2021 World Bank report. Sending money to SA costs 6.2%. Some countries are planning to introduce e-versions of traditional currency.

These are known as central bank digital currencies (CBDCs), and they are studying how the underlying technology could be used.

China’s digital yuan project is said to be the most advanced among large economies, though central banks from the eurozone to the US are in varying stages of research into digital currencies.

Last year, Nigeria’s central bank introduced an eNaira for use by ordinary citizens.

SA has conducted smallscale experiments with a wholesale digital currency.

The country has also participated in a cross-border pilot with the central banks of Malaysia, Australia and Singapore.

The next stage is for the regulators to test the digital rand on a bigger scale and develop rules for its use.

“We’re still learning, we’re still experimenting,” Naidoo said.

Meanwhile, Naidoo said that the Bank wants regulation of crypto assets to prevent theft, money-laundering and the undermining of monetary policy. The Bank is hoping that this regulation it will be in place in the next 15 months.

“If crypto assets were to become a very ubiquitous currency, you could undermine the authority of the central bank,” Naidoo said.

NATIONAL

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2022-05-20T07:00:00.0000000Z

2022-05-20T07:00:00.0000000Z

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