The South African Reserve Bank (SARB) has concluded there is no strong immediate need for a retail CBDC, according to a position paper published this week. The decision is framed around the central bank’s core mandates and directs resources toward payment-system modernisation and targeted wholesale CBDC experiments. The bank cites monetary-policy and financial-stability risks that outweigh immediate retail benefits.
Why SARB shelved a retail CBDC
The SARB’s position paper states that South Africa’s existing payment infrastructure largely meets consumer needs and that a retail CBDC would introduce material trade‑offs. The bank flagged monetary‑policy transmission and financial‑stability risks as principal concerns: a widely adopted retail CBDC could cause bank disintermediation, reducing commercial banks’ deposit base and constraining credit supply, which in turn would complicate policy implementation. The paper references the SARB’s inflation‑targeting remit (3–6%) as central to its assessment of potential disruptions.
Operational and inclusion arguments appear decisive. The paper notes ongoing initiatives—the Payment Ecosystem Modernisation (PEM) Programme, expansion of instant interbank rails such as PayShap, and the SARB’s 50% acquisition in BankservAfrica to convert it into a National Payment Utility—which the bank judges more likely to deliver near‑term improvements in access, cost and interoperability. The background note cites an estimated 16% of adults remaining unbanked, and underscores practical constraints such as electricity and network reliability that a token alone cannot resolve.
Wholesale CBDC, cross‑border pilots and risk management
Rather than retail issuance, the SARB will prioritise wholesale CBDC use cases and cross‑border payment efficiency. The position paper highlights Project Khokha as a live testbed for interbank settlement using a digital rand and describes regional collaboration within the Southern African Development Community (SADC) to develop blockchain‑enabled corridors. These initiatives aim to reduce settlement friction, lower costs, and improve transparency for bank‑to‑bank and cross‑border flows.
The paper explicitly flags crypto assets and stablecoins as emergent risks, noting their potential to bypass exchange controls and introduce cyber and market vulnerabilities. These assessments frame a precautionary stance: innovation is pursued where it improves core plumbing without creating concentration risk or misaligned incentives that could hollow out the two‑tier banking system the SARB relies on for monetary transmission.
Implications for market participants. For treasuries and institutional traders, the SARB’s roadmap signals a low near‑term probability of retail CBDC‑driven disruption to bank funding models. Attention should shift to settlement efficiency gains from wholesale pilots and evolving cross‑border rails, which may alter counterparty and operational risk profiles. Banks should anticipate regulatory and infrastructure changes tied to the PEM Programme and Project Khokha rather than an immediate shift in deposit dynamics.
The SARB’s calibrated stance prioritises system‑level upgrades and controlled experimentation over rapid retail issuance, reflecting an emphasis on preserving monetary‑policy effectiveness and financial stability. The next verified milestone will be the SARB’s progress reports from the PEM rollouts and outcomes from wholesale CBDC pilots such as Project Khokha, which will determine whether a retail CBDC becomes operationally necessary in the medium term.
