South Africa’s central bank, the South African Reserve Bank (SARB), which in the past warned people against cryptocurrencies, has recently stated that it’s too risky for it to launch a cryptocurrency, despite recognizing the potential these currencies have to disrupt the financial industry.
According to local publication ITWeb, the deputy governor of the South African Reserve Bank, Francois Groepe, while speaking at the Strate GIBS FinTech Innovation Conference 2017, made it clear that the bank has an open mind to issuing its own digital currency, but added that it was too risky to do so.
Groepe stated that even though cryptocurrencies like bitcoin are becoming incredibly popular, the central bank needs to make sure that, if it is to issue a virtual currency, it can’t be used for illegal activities such as money laundering or terrorism financing.
Recognizing bitcoin and blockchain’s potential, Groepe added that the financial industry is currently being disrupted, partly thanks to cryptocurrencies. He said:
“We are witnessing the disruption of financial services. Over the past decade or so, fintech’s attention and publicity has continued to intensify and increase. It is continuing to usher in completely new ways of banking. Developments in the fintech space are part of an evolutionary process driven by innovations.”
Taking the technology’s potential into account, he pointed out that regulators should carefully analyze future FinTech developments. Notably, he stated that people are now becoming familiar with the concept of virtual currencies, and that they have the potential to be widely adopted – despite being too risky to be issued by the central bank. He stated:
“Virtual currencies have the potential of becoming widely adopted. However, for the central bank to issue virtual currencies or crypto-currencies in an open system will be too risky for us. This is something that we really need to think about.”
As previously covered by CCN, cryptocurrencies such as bitcoin have been gaining popularity in South Africa. The country’s central bank has been open to the innovation of digital currencies and blockchain technology for a while now, so much so that one tech lawyer believes bitcoin regulation in South Africa will occur.
Groepe pointed out that regulators still don’t have a clear understanding of how digital currencies work, and as such the South African Reserve Bank recently created a three-member team to carefully study the subject.
Moreover, the central bank is also looking to introduce virtual currency “sandboxes”, so businesses that provide cryptocurrency exchange services can experiment and test new products.
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Last modified: May 21, 2020 9:36 AM UTC