South Africa concludes technical Proof-of-Concept for its CBDC settlement system
The South African Reserve Bank would conduct further studies on the project's findings to inform the masses about CBDCs and DLT
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South Africa reached another milestone in its central bank digital currency (CBDC) implementation journey as it concluded a technical Proof-of-Concept (PoC) for its wholesale CBDC settlement system. The project will further be used by the South African Reserve Bank (SARB) to highlight the implications of distributed ledger technology [DLT] adoption in financial markets.
For the CBDC settlement system, two platforms have been developed under the PoC: The first served as a decentralised trading platform and the other was used to manage CBDC. Besides these two projects, a bidirectional bridge was also built to allow easy portability of the CBDC between the two platforms. This bidirectional bridge is similar to those built in DeFi for sending cryptocurrencies across different blockchains.
The project is called Project Khokha 2 (PK2), and constitutes the second phase of the Khokha (PK1) project launched by SARB in 2018. The PK1 project had experimented with DLT technology for interbank payments’ settlement. The project had been successful in replicating SAMOS—the real-time gross settlement system of the banks.
In February 2021, the second phase (PK2) of the Khokha project was launched. The project involved testing DLT with trading and settlement in a PoC environment. There were several names from the industry as a part of the project: FirstRand, JSE Limited, Absa, Standard Bank and Nedbank together formed the Intergovernmental Fintech Working Group (IFWG).
