One of the most memorable ads from the last decade is, at least for me, the Vodacom “we have been having it” series of ads including this one. In them, an Id Amin inspired character expresses amazement that people are constantly praising (yep yep yeping) Vodacom’s features like custom ring tones and having up to the minute news. These things have always been available in his country, yet he is not getting praised for them.
It’s the same feeling I got when I heard South Africa will soon be launching an E-Rand project in partnership with The Bank for International Settlements (BIS) in a project called Project Dunbar. This is almost certainly the international financial system’s response to the rise in digital currencies like Bitcoin.
The objective of the study is to investigate if it would be feasible, appropriate and desirable for the SARB to issue a CBDC to be used for retail purposes, complementary to cash, in South Africa
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It seems everyone has their unmentionables in a twist as they praise or castigate the whole concept of fiat digital currencies like the Yuan. Honestly, I don’t even get what the fuss is all about. Take for us in Zimbabwe, we already have our digital fiat in the form of the RTGS dollar. We don’t hear anyone praising us for it and yet it has all the characteristics of a fiat currency like this E-Rand or Yuan thing.
In other words, we have been having it. The RTGS ZWL’s existence has been grudgingly admitted even by our authorities. We even have some idea of how much of it is in existence as the RBZ regularly publishes its reserve money reports and such stuff. The short of it all is I don’t see anything special about the E-Rand except that it will be, in this pilot program, internationally used. That again is not impressive. It’s not like companies have to walk around with sacks full of Rands right now in order to make international payments. It’s done digitally.
Features of the E-Rand
Here are some of the features the E-Rand will have according to the South African authorities:
- The E-Rand will be legal tender which will be issued by the South African Reserve Bank only. Big deal! The RTGS is already legal tender that is issued by … you know government people. It just appears from time to time. So we have been having it.
- The E-Rand is complimentary to cash and is not intended to replace cash. Come on that’s sounds a lot like the RTGS which was foisted on us instead of cash. We still have our worthless 50s,20s and 10s somewhere in our bags.
- Must be one as to one in terms of parity with the physical Rand. We literally invented one-as-to-one hear so I will spare you the repeat.
- Must be uquitous and accepted as a means of payment by all sizes of business and the government. RTGS ZWL does all that and more.
- It must not introduce the risk of destabilising the financial sector. I don’t know about that but the Zimbabwean economy was tanking before the RTGS so don’t you dare blame it.
- Consumers must be able to own and transact in E-Rand without the need for a bank account. Well, just use Ecocash or Onemoney i.e. your phone number.
- Consumers must be able to obtain the E-Rand and exchange it for cash. The authorities occassionally issue a new note and ask banks to come and get. That sounds similar to me.
- The E-Rand must be traceable. The Financial Intelligence Unit can trace RTGS dollars like you cannot beliee.
- The E-Raand must be auditable in terms of proof of issuance and ownership. Sounds like a whole lot of accounting and legal terms that can be solved by a bank statement.
We have been truly living the dream with our RTGS dollar because all these things the E-Rand will have-we have been having them for a long time too.
The E-Rand will be a stable coin
The only thing remarkable about this currency is that it will be a stable coin. This means it will be a blockchain-based currency that is pegged to a fiat currency. That’s unlike volatile crypto-currencies whose value is based on things like Elon Musk’s frame of mind before each Tweet.
Last time I checked even our government can fix rates too. They have been doing that for decades. They just wake up and say one as to one without baiting an eye-lid and it becomes so. Ladies and gentlemen this E-Rand thing, we already have it here. We truly have been having it.