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SA to feature in global experiment on the use of digital currencies

SA to feature in global experiment on the use of digital currencies

The Bank for International Settlements will test the use of central bank digital currencies with Australia, Malaysia, Singapore and South Africa in an experiment that could lead to a more efficient global payments platform.

Codenamed “Project Dunbar,” the study aims to develop prototypes for a common platform that will enable international settlement in digital fiat currencies issued by central banks, BIS said in a release Thursday. The system would allow direct transactions in central bank digital currencies (CBDCs), between institutions, while reducing time and cost, according to BIS.

Globally, central banks are trying to come to terms with emerging payment technologies pioneered by tech firms including China’s Ant Group Co. Additionally, Facebook Inc.’s Diem project, formerly known as Libra, is building out a global payments network that could service its own stablecoin or central bank digital currencies.

The rapid growth of cryptocurrencies — which are distinct from digital currencies issued by central banks — is posing a potential threat to existing monetary regimes and adding urgency to debates on handling cross-border money transfers.

“We are confident that our work on multi-CBDCs for international settlements will break new ground in this next stage of CBDC experimentation and lay the foundation for global payments connectivity,” said Andrew McCormack, head of the BIS Innovation Hub Singapore Centre.

Results of the study are likely to be published early next year, BIS said.

The SA Reserve Bank (SARB) said in May that it embarked on a study to investigate the “feasibility, desirability and appropriateness” of CBDC as electronic legal tender.

The objective of the feasibility study is to consider how the issuance of a general-purpose CBDC will feed into the SARB’s policy position and mandate. The SARB is one of a growing number of central banks looking at the feasibility of the issuance of digital currencies.

The study will focus on the issuance of a domestic CBDC that can be used by consumers in South Africa for general retail purposes.

The SARB said at that time that it had “made no decision to issue a retail CBDC.

 

Original Article: https://newshub.assetmag.co.za/svw1/item/58336529