JOHANNESBURG - The South African Reserve Bank (SARB) has established a Financial Technology (Fintech) programme to assess the emergence of technological innovations in the financial sector and consider their regulatory implications.
In a statement issued last week the Reserve Bank said it "takes a balanced approach to technological innovations, considering the potential benefits and risks of each innovation."
The programme has three main objectives, all aimed at assisting in the formulation of appropriate policy frameworks for the possible regulation of Fintech.
These include reviewing the Reserve Bank's position on private cryptocurrencies, investigating innovation facilitators and launching a distributed ledger technology (DLT, or blockchain) experiment.
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In the first objective, the review will address regulatory issues like clearing and settlement, exchange control, monetary policy and financial stability and other issues like cybersecurity, the second is on the bank's equivalents in jurisdictions like the UK and Singapore where innovation hubs have been established, accelerators and regulatory sandboxes through with Fintech companies work with the regulators to test their ideas and the third is Project Khokha, similar to the Monetary Authority of Singapore's Project Ubin and will investigate interbank clearin and settlement on a distributed ledger.
The Reserve Bank has appointed ConsenSys, a technology provider with experience on the Quorum, Ethereum-based ledger, to develop a proof of concept in collaboration with the banking industry.
The experiment is aimed at understanding the implications of using distributed ledger technology to transfer value and the Reserve Bank will release a public report on its findings during the second quarter of the year but no decision has been made yet to move the national payments infrastructure onto a distributed ledger.