South Africa finds no ‘strong immediate need’ for a retail CBDC

South Africa will not pursue a retail central bank digital currency (CBDC), with the country’s central bank concluding that there’s no “strong immediate need for such an instrument.”

The South African Reserve Bank (SARB) recently published a position paper outlining its policy view on a retail digital rand, based on findings from years of research, experimentation, and stakeholder engagement. The paper, supported by a 57-page background note, concludes that the country does not need a CBDC and advocates for it to focus on existing digital payment initiatives.

The top bank says it has the technical capability to develop a retail digital rand that aligns with its policy and regulatory objectives. However, South Africa has made significant strides in digital payments, which SARB believes are better suited to advance financial inclusion.

These efforts include the Payment Ecosystem Modernisation Programme, which aims to overhaul the payment infrastructure and build a secure, faster, and more inclusive system.

“…while the SARB does not currently advocate for the implementation of a retail CBDC, it will continue to monitor developments and will remain prepared to act should the need arise,” SARB states.

In the future, the top bank will explore how a retail digital currency would safeguard access to central bank money and complement existing digital payment solutions, SARB says.

South Africa’s outlook mirrors Kenya’s; the East African nation’s central bank dismissed the need for a retail CBDC over two years ago, saying it was not “a compelling priority in the short to medium term.” Kenya’s financial inclusion stands at 85%, with mobile payment services like M-Pesa now used almost universally.

The two are the outliers as other African countries advance their retail CBDC efforts. Ghana has been targeting a 2025 launch of the eCedi, with a banking official recently revealing that the central bank was now ready to launch the digital currency. Nigeria launched its eNaira four years ago, and Uganda recently launched a pilot for its digital shilling.

Like many Western economies, South Africa is shifting attention to a wholesale CBDC.

Beyond CBDCs, the top bank’s position paper dismissed the use of digital assets and stablecoins in payments. Despite the efforts of companies like Centbee, which offer easy onboarding and thousands of partner merchants, South Africans still consider digital assets as investments.

Largest bank’s embrace of China’s CIPS causes a stir

While the SARB pivots away from a CBDC, local banks are exploring cheaper and faster cross-border payment systems. The country’s largest lender is leading the charge, but its integration of China’s yuan-based settlement infrastructure has raised eyebrows.

Standard Bank (NASDAQ: SBGOF) announced earlier this year that it would tap into China’s Cross-Border Interbank Payment System (CIPS), enabling South Africans to make direct payments to China in yuan. Previously, these payments were routed via correspondent banks and settled in U.S. dollars and euros.

Standard Bank’s chief financial officer, Arno Daehnke, has dismissed the concerns, saying the integration was in response to customer demand for faster payments to China.

“We wouldn’t be weighed by geopolitics for signing up to CIPS. We have important clients in China, and we bring important clients to other markets across Europe and the Middle East,” he told an investor conference this week.

South Africa is a founding member of BRICS, a bloc that has been alleged to be orchestrating a global de-dollarization campaign. These ties have drawn the ire of the Trump administration, which pledged to slap 100% tariffs on any country that sidelines the greenback.

A year ago, South Africa publicly distanced itself from any de-dollarization campaigns, denying any plans for a BRICS currency.

Watch: Finding ways to use CBDC outside of digital currencies