SARB pauses digital rand, prioritizes Payshap and Payinc

The South African Reserve Bank has paused the immediate rollout of a digital rand and will concentrate on improving retail payment speed and efficiency. The decision follows tests that showed a central bank digital currency is technically possible but involves trade-offs between privacy and settlement speed. Deputy Governor Rashad Cassim made the announcement in a speech at the Gordon Institute of Business Science.

The bank began researching a central bank digital currency with Project Khokha in 2018 and continued with Project Khokha 2 to test wholesale digital currency models and tokenised interbank liabilities. The trials demonstrated that a digital rand can move and settle funds, but they also revealed operational and legal challenges, including how to determine settlement finality on decentralised networks and how to link token systems with existing bank rails.

Cassim said keeping transactions private “is possible, but it complicates design and slows the system,” and he noted that distributed ledger technology does not automatically interoperate with current payment infrastructure. He described privacy protections, settlement finality and interoperability as unresolved issues that affect clearing speed and consumer convenience.

To address consumer needs first, the Reserve Bank will push Payshap, a real-time digital payments service for everyday transactions. The bank is also moving to convert clearing house Bankserv Africa into a centralised payments utility called Payinc. The stated aim is to modernise the underlying payment infrastructure so consumers can make faster, cheaper and more secure payments.

The decision to delay a CBDC comes as private-sector stablecoins and decentralised finance products expand. Dawie Roodt, chief economist at the Efficient Group, warned that South Africa’s foreign exchange rules have not kept pace with financial technology and that, without a state-backed digital alternative or updated regulation, citizens might increasingly use private stablecoins instead of the rand.

The Reserve Bank said it will reconsider issuing a digital rand only when technical, legal and operational issues — including privacy protections, settlement finality and interoperability with existing systems — can be resolved without slowing clearing or reducing consumer convenience.