South African central bank’s blockchain payments trial hailed as success
Project Khokha analyzes the disruptive potential of and the risks associated with fintech developments.
The South African Reserve Bank (SARB) has released a report on Project Khokha, a successful proof of concept trial of a blockchain-powered enhanced payments system. The trial also involved a number of other banks.
The simulated distributed ledger technology (DLT) tests lasted three and a half months and the results revealed that the average daily volume of the SARB’s payments were able to be processed in less than two hours.
Each transaction was settled within two seconds, with full anonymity and confidentiality. The SARB was able to see the details of all transactions to allow for regulatory supervision, according to a a published report.
The report states that the objectives of Project Khokha was to analyze the disruptive potential of and the likely risks associated with fintech developments such as blockchain. In August 2017, the SARB established the Fintech Unit to assess different structures and the regulatory and strategic implications of such developments.
The SARB collaborated with Absa, Capitec, Discovery Bank, FirstRand, Investec, Nedbank and Standard Bank.
The trial has laid the foundations for future collaborative works and has fulfilled its objective of providing useful insights to all participants, according to the summary report. However, the release also notes that “there are many issues to consider” before the SARB decides to implement a live DLT-based payments system.
One objective of Project Khokha is to provide a better understanding of how South African Multiple Option Settlement (SAMOS) system would integrate with a DLT system. The intention is not to consider changing the approach with the SAMOS replacement, but to provide input to that project. The future direction will also be influenced by further development of the technology and by central banks and other regulators globally continuing to contribute to this field of knowledge. The SARB anticipates continuing work in this area and expects to continue contributing to the body of work in DLT-based systems.
The SARB on its expectations for Project Khokha
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