Sim Tshabalala expresses support for Central Bank Digital Currencies

Standard Bank Chief Executive Sim Tshabalala has expressed qualified support for Central Bank Digital Currencies (CBDC’s), but also said that there were “strong warrants to be sceptical” about the value of privately-generated crypto assets. 

Speaking at the two-day Standard Bank African Central Bank Conference (ACBC) that ends in Johannesburg today, Tshabalala said it was not clear how privately generated crypto assets met a legitimate social need, and also that there was strong evidence that that they make it easier to hide or launder money. This, he said, pointed to the risk that crypto deposits or transactions could create for banks. 

“CBDC’s are an entirely different matter. In our view, wholesale CBCD’s are potentially useful. They could exploit the self-verifying properties of Blockchain to simplify inter-bank clearing. We also think retail CBDC’s could serve a social purpose, particularly by increasing participation in the formal financial system, and by reducing opportunities for tax evasion and other forms of financial crime,” said Tshabalala.

He added that it was not clear at this stage how retail CBDC balances held with commercial banks differ from other deposits, or how CBDCs balances held by an individual or a firm directly with the central bank differs from the central bank turning itself into a retail bank.

He said he was not making an argument against CBDC’s as state-owned retail banks or central banks that are also retail banks were not unusual or unheard of.

“The key question is whether the retail banking arm of the public sector is subject to the same kinds and levels of regulation as its private sectors competitors. If so, then all is well. If not, then calling it a CBDC rather than a state-owned retail bank does nothing to mitigate the risk and moral hazards that an unfairly regulated institution could introduce into the financial system.

SARB Governor Kganyago delivered an opening address at the ACBC 2023, which is being attended by central bank governors and policy makers from 14 African countries under the theme: “Strengthening Africa’s Partnerships”. Among senior government leaders attending is the Prime Minister of Namibia, Honourable Sara Kuugongelwa-Amadhila.

Tshabalala concluded his welcome remarks expressing Standard Bank’s “very bullish” outlook for the Africa free trade area to facilitate the movement of goods, people, ideas and capital between countries on our continent. “We support all efforts in that direction, and I am very excited for that prospect”, he said.

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