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LONDON/JOHANNESBURG, May 18 (Reuters) – A digital rand in South Africa could reduce the high cost of cross-border payments for banks, but its introduction is still a few years away, a senior central bank official said.
However, regulations for crypto assets are in the works and could come into force within nine to 15 months, South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo told Reuters in an interview.
It costs 13% of a transaction to send money from South Africa to another country, more than double the average of the world’s major Group of 20 (G20) economies, according to a Bank report world of 2021.
Sending money to South Africa costs 6.2%.
Some countries are considering introducing electronic versions of traditional currency, known as central bank digital currencies (CBDCs), and are exploring how the underlying technology could be used. Read more
China’s digital yuan project is the most advanced among major economies, although eurozone central banks in the United States are in various stages of CBDC research.
Last year, the central bank of Nigeria introduced an eNaira for use by ordinary citizens. Read more
South Africa has conducted small-scale experiments with a wholesale CBDC and participated in a cross-border pilot with the central banks of Malaysia, Australia and Singapore.
The next step is for regulators to test the digital rand on a larger scale and develop rules for its use.
“We’re still learning, we’re still experimenting,” Naidoo said.
Meanwhile, Naidoo said the Reserve Bank of South Africa wants regulation of crypto assets to prevent theft, money laundering and breaches of monetary policy and hopes it will be in place within 15 coming months.
“If crypto-assets became a very ubiquitous currency, you could undermine central bank authority,” he said.
Reporting by Rachel Savage and Promit Mukherjee; Editing by Lisa Shumaker
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