The South African Reserve Bank (SARB) has released a new position paper evaluating the viability of a retail central bank digital currency (CBDC), concluding that such an initiative is not an immediate priority after years of research, pilots, and industry consultations. Instead, the central bank plans to focus its resources on broader national payment system modernization efforts.
No urgent need for a retail CBDC
“The SARB’s research and experimentation found that a retail CBDC is technically feasible and could be implemented in a way that aligns with regulatory and policy objectives. However, the analysis does not reveal a strong immediate need for such an instrument,” the bank wrote.
For now, the central bank wants to prioritize strengthening the national payment system and expanding financial access, including enabling greater non-bank participation.
The SARB acknowledged that international CBDC experiments provide several arguments in favor of a retail version, particularly its potential to support financial inclusion for underserved communities. Still, the bank stresses that the current environment does not justify moving ahead with implementation.
Its stance “should not be interpreted as a view that South Africa should not implement a retail CBDC in future,” the SARB added, noting that over the long term, a CBDC could help maintain public access to central bank money and enhance the digital payments landscape. To be viable, however, a retail CBDC would need to match the core strengths of physical cash, including offline functionality, universal acceptance, affordability, ease of use, and robust privacy protections.
Shift toward wholesale CBDC exploration
The SARB will now deepen its exploration of wholesale CBDC use cases, with a focus on improving settlement efficiency, driving financial market innovation, and experimenting with cross-border payment improvements.
“Continued active exploration of a wholesale CBDC will also provide valuable insights into interoperability, programmability and settlement efficiency, which may inform future decisions on retail CBDC should the need arise,” the bank said.
Crypto and stablecoins seen as emerging risks
According to the Atlantic Council CBDC Tracker, South Africa is one of 36 countries currently researching CBDC use cases. Only three—Nigeria, Jamaica, and The Bahamas—have formally launched a CBDC, though adoption in those jurisdictions remains limited.
Globally, interest is shifting toward stablecoins, which have seen growing usage. But the SARB warned that South Africa’s rapidly expanding stablecoin market—where trading volumes surged to nearly 80 billion rand (about $4.6 billion) by October, up from less than 4 billion rand in 2022—could pose significant risks if left unregulated.
Earlier this week, as reported by crypto.news, the SARB published a separate notice identifying stablecoins and crypto assets as emerging threats to the financial system, given the absence of a unified regulatory framework to oversee their growth and frequent cross-border movement.
The SARB and National Treasury are currently developing new rules governing crypto assets and international transfers, while the Financial Sector Conduct Authority has already begun licensing several exchanges and service providers. Nevertheless, South Africa still lacks a consolidated regulatory structure, leaving oversight fragmented as the crypto sector continues to expand.
