In a virtual address following the release of a the Khokha report 2, Lesetja Kganyago, the governor of the South Africa Reserve Bank (SARB) has urged regulators and policymakers to play a key role as financial technology continues to evolve globally.
According to the Governor, the role of central banks and regulators should ‘evolve with financial markets’ to ensure they stay relevant in future markets just as they are relevant now.
Furthermore, the Governor pointed out that the participation of regulators and policymakers is important given that decentralized financial markets are not able to fulfill certain needs of the public, including:
- Consumer Protection
- Financial Stability
- Stability and Soundness
Accordingly, the Governor, whose central bank has uncovered some insights from testing the application of blockchain technology for interbank settlement in the 2 Khokha projects, stressed that policymakers and regulators can contribute in shaping a potential move to blockchain-based financial markers.
He even gave a few pointers which include:
- Examining the implications of innovation
- Promoting responsible innovation for the public good
- Informing an appropriate policy and regulatory response
Project Khokha 2, which is the second phase of the country’s trials of an interbank settlement system, was launched in February 2021 and involved the creation of two forms of tokenized money to allow for settlement between financial institutions.
The Governor pointed to the the report for Project Khokha 2 as SARB’s contribution to broader discussions surrounding the regulatory treatment of crypto assets and financial market innovation.
Project Khokha 1 examined the use of blockchain for interbank settlements by successfully replicating some functions of the South African real-time gross settlement (RTGS) system on blockchain.
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