2 Why are we considering issuing a digital euro?īut why are we considering issuing a digital euro? There are many possible motivations to introduce a CBDC and there is, in my view, no global “one size fits all” solution. In Europe, the Eurosystem – which comprises the European Central Bank (ECB), the Bundesbank and the other national central banks in the euro area – is actively working on the possible issuance of a CBDC: A digital euro would be available for use by private end users and companies in the form of a retail CBDC. However, when it comes to developing a retail CBDC, South Africa prefers to be a “very fast follower”, as SARB Governor Lesetja Kganyago phrased it, learning from other countries that are early adopters. Amongst other aspects, the SARB looked into a tokenised form of central bank money to conduct transactions between central banks. Project Khokha 2, for instance, aimed to explore the potential of tokenised money, blockchain and digital currencies. Of course, the South African Reserve Bank (SARB) is also looking into making its payments system future-proof. A survey by the Bank for International Settlements (BIS) showed that nearly 90% of all responding central banks are conducting some kind of CBDC research. While a few countries have already launched a CBDC, other central banks are at the stage of piloting theirs, most prominently in China. The goal is not to introduce another separate currency, but to create a new, digital form of central bank money in existing currency areas. However, we do not use this term, mainly because these assets are unable to serve as a store of value due to their high level of volatility.Īround the globe, central banks are initiating projects with the aim of issuing their own CBDC. That distinguishes them from crypto-assets, such as Bitcoin, sometimes also referred to as “cryptocurrencies”. CBDCs are basically digital representations of a nation’s fiat currency, issued by the central bank. With digital payments on the rise, central banks – as the sole issuers of public money – need to respond adequately to these new challenges, as they relate to our statutory mandate to ensure safe and efficient payments.Ī key development in this regard is the growing interest in CBDCs among central banks around the world. Cashless payments are becoming increasingly popular, new digital payment solutions are emerging, and providers of innovative payment services have entered the scene.
In recent years, the financial landscape has been undergoing a rapid transformation, driven by technological advancements and changing consumer preferences.
But only in the last few years, the theoretical concept has gained traction, with central banks entering into more practical experiments and prototyping. I am looking forward to discussing with you a topic of immense significance that may be shaping the future of our financial systems – central bank digital currencies, or in short: CBDCs. I am delighted to be here with you today at this esteemed university in beautiful Cape Town.
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