The SARB on the Necessity of a Retail CBDC in South Africa (SARB)

The South African Reserve Bank published a position paper and background note on retail central bank digital currency (CBDC). They examine whether a retail CBDC could address persistent gaps in South Africa’s payment ecosystem, where approximately 16% of adults remain unbanked and many rely on cash despite growing digital payment adoption driven by commercial banks and fintechs. The SARB identifies three core considerations: whether a CBDC fills an unmet need, whether it should be prioritized given ongoing modernization initiatives (particularly the PayShap fast payments system and expanded non-bank participation), and whether it can match or exceed cash’s value proposition across twelve dimensions including accessibility, offline capability, trust, acceptance, cost, and privacy. Drawing on limited international evidence, primarily characterized by low adoption rates in the few jurisdictions that have launched retail CBDCs, the SARB determines that current resources should focus on existing payment system modernization rather than CBDC implementation. The paper acknowledges potential longer-term value in maintaining public access to central bank money in a digital economy and enabling financial innovation through technologies like smart contracts and tokenization, but concludes these considerations do not justify immediate action. Consequently, the SARB will shift its attention toward wholesale CBDC exploration while continuing to monitor retail CBDC developments globally. [Source: SARB]

Nigerian Central Bank Pivoting from Retail to Wholesale CBDC (Currency Research)

At the Currency Research (November 17-20 Cedi@60 Anniversary Currency Conference I had the honor of moderating a panel on central bank digital currency (CBDC) trust establishment with Jean-Michel Godeffroy (ex-ECB), Roman Hartinger (G+D) and Musa Jimoh (Director of the Payments System Policy Department at the Bank of Nigeria). The whole 30 minute session is worth watching (it starts at around the 4h 58m mark), but Musa’s interventions are particularly newsworthy, as he explained why the Nigerian central bank is pivoting away from retail CBDC to wholesale CBDC. Recall that Nigeria is one of only three countries where retail CBDC has recently been fully launched.) He explained how the e-Naira story is not a “rosy” one, and ran through some of the reasons. For starters, commercial banks were not willing to support the new payment instrument that they viewed as competition, and that support was essential for e-Naira success because the banks “owned” the merchants. It didn’t help that the banks couldn’t charge fees on e-Naira transfers, and the central bank wasn’t sharing in any of the platform costs. Also, Nigerians are very much into crypto-asset markets and the e-Naira didn’t offer the payments privacy expected of a payment medium. In addition, the central bank has been running a popular instant payment system since 2014, which made the e-Naira rather redundant. [Source: YouTube]

Eurosystem to Invite Payment Service Providers to Participate in Digital Euro POC (ECB)

The European Central Bank (ECB) will invite European payment service providers in early 2026 to join a 12‑month digital euro proof-of-concept (POC) that will take place in the second half of 2027. It will be aimed at testing the technical, functional and operational readiness of a potential digital euro in a controlled environment with limited participants. The POC will involve only Eurosystem staff, selected merchants that already provide everyday services on the office premises of the ECB and of euro area national central banks, as well as selected e-commerce platforms. Eurosystem staff will have the opportunity to make payments from person-to-person (both online and offline) and from person-to-business (both at the physical point of sale and on e-commerce platforms). Participating payment service providers will be selected based on their capabilities and a set of pre-defined selection criteria, and their ability to ensure representative coverage of the Euro area market in terms of size, geographical coverage and market reach. [Source: ECB]

Stablecoins Could Lead to Better Payments, But Risks Remain (Sveriges Riksbank)

Sveriges Riksbank published a staff memo that argues that while stablecoins are still largely used within the crypto-asset ecosystem, they could meaningfully improve payments—especially cross‑border—by leveraging open distributed ledger technology (DLT) networks, supporting faster and cheaper transfers, and offering easier foreign‑currency access in weak monetary jurisdictions, but that this potential is tightly bound up with significant risks and policy trade‑offs. Key concerns include: heavy concentration in USD‑pegged coins and the associated risk of dollarization and spillovers from US markets; financial‑stability vulnerabilities such as runs, fire‑sale risk in reserve assets, decentralized finance (DeFi) linked contagion, and possible bank disintermediation; and loss of “monetary singleness” if different stablecoins trade at discounts. The memo reviews how regimes like European (MiCA) and U.S. (GENIUS Act), plus emerging U.K. and other hub‑jurisdiction frameworks, try to balance innovation with safeguards around full backing, redemption, governance, and financial integrity, while central banks debate whether to give issuers access to settlement systems, allow reserves as backing assets, or provide liquidity backstops. Overall, it concludes that stablecoins should evolve into tightly regulated private money aligned with existing monetary systems, and that strong international coordination is essential to manage their cross‑border, systemic implications.​ [Source: Sveriges Riksbank]

Upcoming Speaking Engagements:

The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! [Register here and get 20% off the regular ticket price by using the Kiffmeister20 code!]

I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.