South African Officials Consider National Cryptocurr. “Too Risky"

The South African Reserve Bank (SARB) has described the development of national cryptocurrencies as ”too risky” for the central bank to consider. The statement has been made during a period of increasing development of national cryptocurrencies on the part of authoritarian governments.

“For the Central Bank to Issue Virtual Currencies or Crypto-Currencies in an Open System Will Be Too Risky” – Francois Grope, Deputy Governor of the South African Reserve Bank

During a recent keynote address at the 2017 Strate GIBS Fintech Innovation Conference, Deputy governor of the South African Reserve Bank, Francois Grope, has described the possibility of developing a national cryptocurrency as “too risky”.

During his address, Grope acknowledged the immense disruptive potential of bitcoin and cryptocurrency, and the transformations that contemporary fintech technologies are driving upon traditional banking processes. “We are witnessing the disruption of financial services”, Grope stated. “Over the past decade or so, fintech’s attention and publicity has continued to intensify and increase. It is continuing to usher in completely new ways of banking. Developments in the fintech space are part of an evolutionary process driven by innovations… Virtual currencies have the potential of becoming widely adopted. However, for the central bank to issue virtual currencies or crypto-currencies in an open system will be too risky for us. This is something that we really need to think about.”

The statements come at a time of increasing development of national cryptocurrencies and blockchains, particularly on the part of authoritarian governments. In recent months, Belarus, Singapore, Russia, and China have taken significant steps toward the development and issuance of state directed virtual currencies.

Last month, the central bank of Belarus announced the implementation of blockchain technology into its banking sector, and unveiled plans for future applications for blockchain in the nation’s financial system. Belarus’s central bank revealed that blockchain technology will initially be used as the basis of transnational information transfers. “The new mechanism of maintenance of the register of bank guarantees will ensure the mutual access of the economic entities of the states being members of the Eurasian Economic Union [Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia] to the procedures of the government procurements of goods (works, services).” From there, Belarus intends to utilize blockchain technology as the basis for the issuance of securities and the development of the centrally administered national smart contract network. Belarus’s central bank has explicitly stated that it does not intend to utilize the national blockchain for virtual currency transfers.

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