The Digital Payments Plan from South Africa’s Reserve Bank has been unveiled, aiming to achieve the objectives of their 2015 Vision 2025 strategy.
The country’s progress in embracing digital payment methods has been “relatively slow,” according to the report. To make up for lost time, potential strategies were explored, such as implementing cryptocurrencies and central bank digital currencies (CBDCs).
The banking sector in South Africa is advanced, including finance services. However, people with modest income levels in South Africa still heavily rely on cash instead of digital payments, according to the report. Barriers such as high costs, low financial knowledge, limited availability, and mistrust are hindering progress towards greater use of digital payments.
The blueprint focused on outlining strategies for expanding financial tech availability, upgrading local payment systems, and eliminating impediments to usage – all within our country’s borders.
In South Africa, crypto assets don’t have the status of legal tender but aren’t prohibited either. Retailers like Pick n Pay allow Bitcoin payments at around 1,600 outlets as a case in point. The South African Reserve Bank (SARB) is investigating global regulations and is receptive to expanding the application of distributed ledger technology.
“In the interim [before regulations are in place], the SARB is open to allowing eligible stablecoins used for domestic payments to be tested in the regulatory sandbox.”
The South African Reserve Bank announced that the regulatory “sandbox” for cryptocurrencies will last for two years. Simultaneously, they are granting licenses to local cryptocurrency exchanges, thereby introducing digital currencies into the country’s financial framework.
The SARB initiated an investigation into retail CBDCs in 2021, recognizing their potential for more affordable transactions and enabling real-time digital payments, whether online or offline, between individuals (peer-to-peer). The exploration of both retail and wholesale CBDCs is predicted to continue for the next two years.
In South Africa, tokenization encounters regulatory challenges. The South African Reserve Bank (SARB) acknowledges the advantages of tokenization, particularly its heightened security features. Yet:
“Existing regulations may not be specific or enabling for tokenised use cases, which may result in unregulated or the underregulation of payment activities that introduce risks in the payment ecosystem.”
Meanwhile, the SARB is monitoring the growth of the technology, it said.
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2024-04-22 21:56