South Africa finishes technical PoC for wholesale CBDC settlement system
South Africa has taken another step closer to implementing its central bank digital currency (CBDC) as the South African Reserve Bank (SARB) concludes a technical proof-of-concept for the project.
The project, titled Project Khokha 2 (PK2), is the second phase of SARB’s Project Khokha (PK1), launched in 2018. It experimented with distributed ledger technology (DLT) for interbank payments' settlement, successfully replicating the banks’ “SAMOS” real-time gross settlement system.
This second phase, PK2 was launched in February 2021 and tested DLT with clearing, trading and settlement within the proof-of-concept environment with industry participants Absa, FirstRand, JSE Limited, Nedbank and Standard Bank who form the Intergovernmental Fintech Working Group (IFWG).
Using the technology, SARB tested the issuance of debt instruments and enabled two payment options for settlement, a wholesale central bank digital currency (wCBDC) and a wholesale settlement token (wToken), a commercial bank issued form of private money.
The proof-of-concept developed two DLT platforms, one which served as a decentralized trading platform and the other which managed the CBDC.
A bidirectional bridge similar to those used in DeFi when sending cryptocurrencies across different blockchains was also built, allowing portability of the CBDC between the two platforms.
The results of the project highlighted the regulatory, business, and operational implications that DLT would have in the market. A statement by SARB summarized that the technology would streamline functions carried out by separate infrastructures onto a single platform, potentially reducing cost and complexity.
Related: Sweden’s central bank completes second phase of e-krona testing
In the report,
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