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The SA Reserve Bank has called on solutions providers to express interest in participating in its domestic central bank digital currency project.
Through the project, which falls under the Reserve Bank’s currency management department, the bank aims to explore the feasibility, desirability and appropriateness of using a digital currency for electronic legal tender that will complement cash.
The expression of interest (EOI) (opens as PDF) was published on the Reserve Bank’s website on 26 April. The closing date for the EOI is 6 June, while the Reserve Bank said it expects to make a decision on shortlisted participants within two months of the deadline.
The Reserve Bank on Tuesday (14 May) held EOI Briefing Session in Pretoria where it discussed the central bank digital currency project
On Tuesday (14 May) the Reserve Bank held an EOI Briefing Session in Pretoria. An overview (opens as PDF) of the meeting among other things covers the scope of the project, how it will be executed, design principles and attributes of a central bank digital currency, as well as procurement details.
How the project will be executed
The Reserve Bank said the feasibility project will be run in two stages.
The first stage will be internal and within the Reserve Bank’s environment to allow it to test principles, validate proposed technical solutions and enhance the body of knowledge around digital currencies.
The second stage of the feasibility project will see the Reserve Bank extend participation to selected banks, mobile network operators and potentially to service providers and niche technology suppliers in order to address the full value chain.
The meeting briefing cites competition form private cryptocurrencies and payment systems, emerging technologies, under-served markets and industry needs as some of the policy drivers behind the project.
Policy drivers, risks and benefits
The Reserve Bank hopes a central bank digital currency will among other things enable innovation, improve transparency, as well as maintain and enhance price and financial stability.
In addition, the briefing cites deepening of financial inclusion, the modernisation or optimisation of issuance of legal tender, as well as the stimulation of competition of money forms as benefits of a central bank digital currency.
However, the Reserve Bank also acknowledges that a central bank digital currency carries risks that include security, lack of adoption, lack of buy-in, potential disintermediation as well as operational and reputation risks.
Solution providers are expected to provide solution architecture input and guidance, technical skills and technology capacity to design, develop, host and execute selected use cases in an innovation lab environment.
In addition, solution providers must also provide value-adding input around the business cases or business solution requirements.
In January, the Reserve Bank called on the public to provide comments on a consultation paper on crypto assets.
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