Home  »  Articles   »   SARB Shines Light on Central Bank Digital Currency

SARB Shines Light on Central Bank Digital Currency

May 27, 2021

South African Reserve Bank

The Reserve Bank (SARB) is looking at the feasibility of introducing Central Bank Digital Currency (CBDC) as electronic legal tender.

In a statement, the SARB points out that the CBDC would be used for general-purpose retail use, complementary to cash.

According to the SARB, the aim of the “feasibility study is to consider how the issuance of a general-purpose CBDC will feed into the SARB’s policy position and mandate”.

“The feasibility study will include practical experimentation across different emerging technology platforms, taking into account a variety of factors, including policy, regulatory, security and risk management implications.”

The plan is to complete the feasibility study in 2022.

Meanwhile, the SARB has called for comment on a discussion document on the use of the Deposit Insurance Fund to reimburse covered depositors.

The paper describes the proposals for the “reimbursement of covered depositors of a failed bank by the Corporation for Deposit Insurance (CoDI), after its establishment in terms of the Financial Sector Laws Amendment Bill (FSLAB)”.

The paper focuses on how CoDI will use the information submitted by banks on a monthly basis to prepare for its role in the resolution of a distressed bank.

“CoDI’s main responsibility in resolution will either be to pay out covered depositors in the event that a bank is closed and liquidated or to financially support an open bank resolution strategy of a systemically important financial institution.”

Comment is invited until 30 June 2021.

In a separate matter, the Independent Regulatory Board for Auditors (IRBA) recently briefed parliament on the implementation of the Auditing Profession Amendment Act.

The act came into effect on 26 April 2021.

The act aims to amend the Auditing Profession Act, 2005, so as to:

• insert a definition;
• strengthen the governance of the Regulatory Board;
• strengthen the investigating and disciplinary processes;
• provide for the power to enter and search premises and to subpoena persons with information required for an investigation or disciplinary process;
• provide for the power to issue a warrant for purposes of entering and searching of premises;
• provide for processes to be followed after an investigation;
• provide for sanctions in admission of guilt process and following a disciplinary hearing;
• provide for offences relating to investigation and disciplinary process;
• provide for the protection and sharing of information;
• provide for transitional measures; and
• provide for matters connected therewith.

The act sets down how the investigating committee, disciplinary committee and subcommittees of the IRBA are to be constituted.

Detail is provided on powers to enter and search premises, warrants, process following investigation, disciplinary hearing and sanctions in admission of guilt process.

In order to strengthen the independence of the IRBA and address issues of conflict of interest by members of the IRBA, the amendments prohibit registered auditors and candidate auditors from being appointed as members of the IRBA.

The amendments also seek to empower the investigating committee to authorise an official of the IRBA to enter and search premises or subpoena any person with information required to complete an investigation in order to address issues of non-cooperation by auditing firms during improper conduct investigations.

The IRBA will also be able to, if appropriate, refer a matter brought against a registered auditor to an accredited professional body for investigation.

Implementation includes drawing up a draft regulatory strategy to be gazetted by 26 October 2021; review Board Standing Resolutions; update Reportable Irregularities guideline; amend Disciplinary Rules; review subpoena, and search and seizure guidelines and implementation of POPIA.