Reserve Bank considers digital currency

The South African Reserve Bank has not precluded the possibility of issuing a national digital currency, which would likely harness Blockchain or Distributed Ledger Technology, according to a Moneyweb report.

Tunisia is the only African nation to have issued a digital currency. With more than 600 000 Tunisians currently using the eDinar, the country is set to become the first in the world to issue a national currency via advanced Blockchain technology. Senegal is set to follow suit by offering a digital West African franc later this year.

Digital currencies are appealing because they are convenient, easy to use and have a wide reach, as well as being able to ensure real-time settlements at reduced cost. However, there are concerns over cyber-criminal threats and the unregulated nature of business models.

"If we go the route of issuing a digital currency, the objective would be to take advantage of emerging technologies so that we reap the benefits," said Tim Masela, head of the National Payments System at the South African Reserve Bank.

"The proponents of the technology say 'you don't need to regulate it; it will self-regulate'. We don't have an idea of how that will happen, we still need to reflect on this and need a good case to show that it can self-regulate. Otherwise, we believe that if it is not regulated and things go wrong, it could have a spillover effect into the financial systems."