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#Cryptocurrencies

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

   

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:

  • 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.


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