The South African Reserve Bank (SARB) has concluded there is no “strong immediate need” to issue a retail central bank digital currency (CBDC), based on a position paper and background note published in November 2025 and reinforced in its 2024/25 annual report. After pilots including Project Khokha, the bank cites limited incremental benefits for consumers and heightened risks to financial stability. It is therefore prioritizing payment-system upgrades and wholesale CBDC experiments.
Why SARB is deferring a retail CBDC
SARB’s assessment finds that a retail CBDC currently offers insufficient advantages over existing payment rails. The bank notes the technical feasibility of a digital rand but judges it would not clearly outperform cash and modern electronic payments on metrics that matter to everyday users. Key operational and policy concerns shaping the decision include the risk of commercial bank disintermediation—where rapid deposit flight into central-bank accounts could reduce banks’ lending capacity and stress liquidity channels—and unresolved trade-offs between privacy and anti‑money‑laundering controls. The bank also flags cybersecurity as an existential exposure: a compromise of central bank-issued digital money would pose systemic consequences for trust and national security.
SARB frames inclusion limits as infrastructure problems rather than a payments-design shortfall, citing unreliable network and power supply and cost constraints as root causes that a new digital currency alone would not fix. It further warns that unregulated cryptocurrencies and stablecoins present regulatory blind spots that could undermine exchange controls and create hidden systemic risk, increasing the need for a cautious, holistic approach rather than rapid retail rollout. The position paper places South Africa’s stance within a global context where an estimated 91% of central banks are researching CBDCs, while some African peers have already piloted or launched digital currencies.
Pivot to wholesale CBDC and payment modernisation
Rather than pursue immediate retail issuance, SARB is directing resources to modernize existing infrastructure and to wholesale CBDC use cases. Domestic initiatives named include the Payment Ecosystem Modernisation Programme and PayShap, aimed at lowering costs and widening participation through incremental reforms. On wholesale experimentation, Project Khokha remains active and is complemented by South Africa’s involvement in cross-border work such as Project Dunbar, which explores multi‑jurisdictional wholesale liquidity and settlement efficiencies. SARB frames this combined strategy as focused on where near-term benefits and systemic resilience gains are highest.
Implications for investors, product teams and compliance are direct: firms should expect continued emphasis on regulated rails and interoperability standards rather than immediate central‑bank retail rails, and prepare for tighter supervision of stablecoins and crypto platforms that could transgress exchange-control boundaries. The central bank also signals the potential for a regulatory vacuum if retail CBDC policy is not clarified, which could complicate long‑term planning for banks and fintechs.
SARB’s decision to pause retail CBDC implementation preserves financial-stability safeguards while directing innovation toward wholesale pilots and payment-system upgrades. The next verified milestone will be SARB’s subsequent policy update or detailed progress report on Project Khokha and its payment-modernisation initiatives.