South Africa rolls out second CBDC trial

Wednesday 17 February 2021 12:56 CET | News

South Africa has announced Project Khokha 2 to explore the use of both a wholesale central bank digital currency (CBDC) and a wholesale settlement token, for interbank use.

According to Ledger Insights, whereas mainstream stablecoins persist over time and can be held as digital money, settlement tokens are only intended to be held for the short term. So, bank cash is tokenized, a payment is made, and the token is converted back to cash in another bank account. Tokenization enables instant on-chain settlement or delivery versus payment.

The trial will explore using both forms of tokenized money to settle debenture or bond transactions. When Ledger Insights asked about the technologies, the Intergovernmental Fintech Working Group (IFWG) Innovation Hub clarified that the CBDC would use R3’s Corda enterprise blockchain, and the settlement token and debenture will use a variant of Cosmos blockchain interoperability solution.

Accenture, Block Markets Africa (BMA), and Deloitte will be involved. Accenture will be responsible for tokenizing the wholesale CBDC on Corda, BMA will help with distributed ledger technology (DLT), tokenizing the bonds and the wholesale payment token using its custom Cosmos-based solution, and Deloitte will document the insights.

Other participants in the trials will include commercial banks Absa, FirstRand, Investec, Nedbank, and Standard Bank, the Johannesburg Stock Exchange (JSE), and Strate, South Africa’s central securities depository.

To learn more about CBDCs, download our ebook Central Bank Digital Currencies for Dummies – A Quick Guide into CBDCs.

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Keywords: Project Khokha, CBDC, blockchain, Corda, R3, stablecoin, Token
Countries: South Africa