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South African Central Bank Tested Bank-To-Bank Payments Using Cryptocurrency

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The South African Reserve Bank (SARB) recently concluded Project Khoka – which saw 8 banks test an interbank payment platform. The platform was based on Etheruem and the banks involved were:

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  • SARB
  • Absa
  • Capitec
  • Discovery
  • Investec
  • FirstRand
  • Nedbank
  • Standard Bank

How did it work?

The current platform the SARB is using to settle real-time gross settlement is called South African Multiple Gross Operation Settlement System (SAMOS).

The Ethereum platform they used for the tests, was built by ConsenSys (a New York based Blockchain technology company). The platform is known as Quorom and the aim of the project was to replicate some of the functionality offered by SAMOS – but in a distributed ledger setup.

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Every bank involved in the project had a node (a computer that participates in the Ethereum network) on Project Khokha’s network. Each of these computers was kitted out with four virtual CPUs and 16GB RAM. The pilot project contained a variety of server types, including public cloud services from Microsoft Azure and Amazon Web Services.

Source- mybroadband.co.za

The transactions tested were not actual transactions but SARB tried to make the transactions as close to real-life. The ISO20022 -A single standardisation approach used by all financial standards initiatives- standard was used. This allowed SARB to view

Grass is always greener on the other side of the fence?

The central bank in Zimbabwe has outright banned cryptos in the country and is currently in an on-going court battle with Golix – the leading crypto-exchange in the country. The RBZ has opted to “follow” other countries and I think this is an irresponsible move.

Now I’m not saying they should have dropped everything and run with digital currencies. That would be equally irresponsible. The pilot project SARB is conducting with the banks they regulate seems like a level-headed approach and it will allow the banks and their regulator reach a more informed decision (the opposite of what the RBZ did).

With the tests that the SARB is conducting if they go on to declare that they won’t be pursuing crypto’s they will share the reasoning behind that decision and that’s more palatable than a ban based on fear or exploration. Anyway – before this turns into a rant- kudos to the South African Reserve Bank for testing it out.

GolixNedbank

Golix is a Cryptocurrencies exchange in Zimbabwe. Golix was founded in December 2014 and was initially called BitFinance while their exchange was called Bitcoin Fundi. The company was founded by Tawanda Kembo and Verengai Mabika. In May 2018, Golix was ordered to shut down operations... Read More About Golix

Nedbank Zimbabwe is a commercial bank in Zimbabwe. It is a subsidiary of the Nedbank Group headquartered South Africa, itself a subsidiary of Old Mutual Group. The Nedbank Group own 74% of stake in the MBCA Bank, Old Mutual Zimbabwe owns 18.30% and the rest... Read More About Nedbank


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4 thoughts on “South African Central Bank Tested Bank-To-Bank Payments Using Cryptocurrency

  1. You cannot say kudo’s to SA, and be condescending on Zim because the rest of the world are doing these things, and Zimbabwe isnt.

    The rest of the world hasn’t gone through hyperinflation or “quasi fiscal activities” over the last 20 years. look at how many times we’ve changed currencies, because the RBZ and banks cannot manage even basic withdrawals and deposits properly. literally, our banks still require you to write a deposit form, and get it stamped…. they’ve only just phased out manual RTGS forms (in 2018!!). Our RTGS system takes two days to complete…. where is the “realtime” in Realtime Gross Settlement statement?

    Our banks and companies like Zimswitch have really only innovated to levels that have been standard across the world in 2001. So please rather look at our financial system for what it is, rather that suggest we need to be progressive and on the ball like everywhere else, when clearly our fundamentals are broken, dead, missing and require CPR before we can even operate the basics of banking and transactions in Zim.

    1. I’m not sure I get you, are you suggesting that the RBZ shouldn’t study new technologies just because they failed on the old ones? If anything that’s exactly why they should invest in learning more about blockchain. If done right it could make them competitive again..

  2. I enjoyed this article. My frustration is equally shared by the writer, why is it that the people who lead us don’t have a single clue what is really going on? Not even a single case of innovation on there part- if one is there please point it out.
    I wait for the day when people with degrees and masters in Banking and finance let there creativity flow and improve the way things are done. In true Wakanda style, “Just because something works, doesn’t mean you can’t improve it.”

  3. Please be clear this in not about bit coin and golix… This is about block chain there goes your bias towards golix techzim.golix cannot survive before they were a money transfer service using a premium… Now that the going has gotten tough they have left and are not even returning the coins let alone the money… Unfortunately their record actually vindicated rbz

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