South African CBDC Feasibility Study - Aug Article PDF

\# A South African CBDC -- to be or not to be? Most recently, the South African Reserve Bank announced that it is looking into the feasibility of a CBDC that can be used domestically by consumers for general retail purposes. Put simply, a CBDC is a digital form of a country\'s fiat currency that is...

\# A South African CBDC -- to be or not to be? Most recently, the South African Reserve Bank announced that it is looking into the feasibility of a CBDC that can be used domestically by consumers for general retail purposes. Put simply, a CBDC is a digital form of a country\'s fiat currency that is issued and regulated by the central bank. Unlike cryptocurrencies such as Bitcoin, which operate on decentralised networks, CBDCs are centrally controlled and backed by the full faith and credit of the government. CBDCs aim to digitise traditional forms of currency, providing a secure and efficient means of payment and financial transactions in the digital age. South Africa's investigation into a CBDC echoes developments in other countries around the world. Some countries have pioneered the use of CBDCs, including The Bahamas, with its SandDollar, Jamaica with its JAM-DEX, and Nigeria with the eNaira. According to the International Monetary Fund, more than 100 other countries including South Africa, are in the exploration stage, with territories such as Brazil, India, and the United Kingdom leading the pack. Regardless of the outcome of the SARB's feasibility study, the Reserve Bank's interest in digital currency is illustrative of just how ubiquitous it has become, and of the very real possibility that cash may finally have a worthy contende \#\#Regardless of the outcome of the SARB's feasibility study, the Reserve Bank's interest in digital currency is illustrative of just how ubiquitous it has become, and of the very real possibility that cash may finally have a worthy contender. By Roger Eskinazi, Managing Partner, Tickmill Financial Planning Page 44 Financial Planning COVER Magazine Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry\'s standard dummy text ever since the 1500s, A game-changer in the making The benefits of wider digital currency adoption in South Africa are myriad. The transition could streamline financial transactions, reduce the costs associated with cash handling, and enhance overall economic efficiency. Digital currencies can also facilitate easier cross-border transactions and boost international trade. Furthermore, the broader appeal of digital currency lies in its ability to promote greater levels of financial inclusion. In South Africa, where almost a third of the population is unbanked, digital currency has the potential to break through the barriers that prevent many from accessing traditional financial services. In regard to a CBDC in particular, a currency of this nature would be regulated by the SARB and backed by the government, providing a stable and secure alternative to physical cash. At least in terms of what a digital currency means for personal safety and the reduction of petty theft and armed robbery, the move could be revolutionary. Many hurdles to clear Like any other form of digital innovation however, there are a few clear hurdles. South Africa recently become the continent's cybercrime hotspot. The past few years has seen a dramatic spike in phishing attempts, cases of identity theft, digital fraud, malware and ransomware. Cybersecurity experts have been fast to react to this upsurge, but not before cybercrime put a damper on consumer trust and confidence. The digital currency innovators of the future will need to work hard to win the trust of the mainstream public and employ robust security measures to prevent that trust from being eroded by opportunistic criminals. There's also the issue of accessibility to consider. While on the one hand, digital currency could bring more people into the fold of economically active citizens, in another sense it could also widen the digital divide. Digital currencies require robust technological infrastructure, including reliable internet access and digital literacy. In South Africa, where there are significant disparities in access to technology, with rural areas often lacking the necessary infrastructure, this digital divide could hinder widespread adoption and usage.