The South African Central Bank has launched a proof-of-concept project to replicate interbank settlements on an Ethereum based blockchain.
Last week, the South African Reserve Bank (SARB) – the country’s Central Bank -announced a new FinTech initiative (‘Project Khokha’) in collaboration with Ethereum coding collective “ConsenSys”, to process wholesale payments with Quorum (an Ethereum-blockchain application developed by JPMorgan and EthLab).
“The aim of this project is to gain more understanding of distributed ledger technologies (DLTs) in collaboration with the banking sector, and to replicate interbank clearing on a DLT in order to collaborate industry-wide to better understand the potential benefits and risks of DLTs.”
This initiative comes somewhat as a surprise given that the deputy governor of the SARB recently claiming that a Central Bank relying on blockchain technology would be “too risky” (August 2017).
The SARB also intends to issue its own digital token to strengthen its interbank settlements, thereby mimicking its counterpart in Singapore. With “Project Ubin”, it created a Singapore dollar as a digital token to feed its interbank blockchain concept (also based on Ethereum).
The SARB emphasizes however, that this effort does not directly imply that blockchain is now seen as the core technology that will drive the national payment infrastructure. It is an experiment to understand and analyze the use of blockchain.
A public report on this will be issued in Q2 2018, the Central Bank added.