The South African Central Bank is Considering a Digital Rand to Reduce Cross-Border Payment Expenses

According to a senior central bank official, a digital rand in South Africa might reduce the high cost of cross-border payments for banks, but its adoption is still a few years away.

However, South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo told Reuters that crypto asset regulation is in the works and may be implemented within nine to 15 months.

According to a World Bank analysis from 2021, remitting money from South Africa to another nation costs 13% of the transaction, which is more than twice the average of the Group of 20 (G20) top global economies.

It costs 6.2 percent to send money to South Africa.

Some governments are considering introducing electronic versions of conventional currencies, known as central bank digital currencies (CBDCs), and are researching how the underlying technology may be utilized.

The digital yuan initiative in China is the most advanced among big economies, while central banks from the eurozone to the United States are researching CBDCs at various levels.

Nigeria's central bank launched the eNaira last year for everyday usage.

South Africa has experimented with a wholesale CBDC on a modest scale and engaged in a cross-border trial with the central banks of Malaysia, Australia, and Singapore.

Regulators will next test the digital brand on a larger scale and create guidelines for its usage.

"We're still testing and learning," Naidoo added.

Meanwhile, Naidoo said that the South African Reserve Bank wants to regulate crypto assets in order to avoid theft, money laundering, and monetary policy undercutting, and that it aims to have it in place within the next 15 months.

"You might undermine the central bank's authority if crypto assets become a very pervasive currency," he warned.