A Statutory Analysis of the Role of the South African Reserve Bank and Other Role-Players in the Promotion of Financial Inclusion Through the Regulation and Use of Central Bank Digital Currencies in South Africa
Keywords:
regulatory bodies, financial inclusion, central bank digital currencies, low-income earners, digital financial servicesAbstract
Financial inclusion has emerged as a critical goal for policymakers in many countries, including South Africa. Notably, low-income earners are still underserved and excluded from accessing traditional banking services in South Africa. On the other hand, central bank digital currencies (CBDCs) provides innovative financial technology solution which could be utilised to promote financial inclusion through providing a secure, affordable and accessible payment solution. This article provides a statutory analysis of the role of the South African Reserve Bank (SARB) and other financial sector regulatory bodies and role players in promoting financial inclusion through the adoption and use of retail CBDCs in South Africa. Moreover, this article seeks to examine the current enforcement approaches and the duties of regulatory bodies and other role-players in the promotion of financial inclusion for low-income earners in South Africa. Furthermore, the role of the SARB, regulatory bodies and other role players involved in the promotion of financial inclusion through the use of retail CBDCs is investigated. Such regulatory bodies include the Financial Sector Conduct Authority, the Prudential Authority, the Financial Intelligence Centre, the National Credit Regulator, and the Independent Communication Authority of South Africa. Other role-players include the National Consumer Tribunal, the National Consumer Commission and the Banking Association of South Africa. This investigation is conducted to determine whether the statutory mandates of these regulatory bodies and role players enable them to support the adoption of retail CBDCs to curb the financial exclusion of low-income earners in the South African financial sector. This is done to recommend reforms that may be necessary should the SARB opt to adopt retail CBDCs following their feasibility study on the desirability of issuing a retail CBDC in South Africa.
References
Abel, S., Mutandwa, L., & Le Roux. P. (2018). A Review of Determinants of Financial Inclusion. International Journal of Economics and Financial Issues, 8(3), 1-8.
Adams, M., Boldrin, L., Ohlhausen, R., & Wagner. E. (2021). An Integrated Approach for Electronic Identification and Central Bank Digital Currencies. Journal of Payments Strategy & Systems, 15(3), 287-304.
Ahiabenu, K. (2022). A Comparative Study of the Design Frameworks of the Ghananian and Nigerian Central Banks’ Digital Currencies (CBDC). Fintech, 1, 235-249.
Antonie, F. (2001). Financing Development: The Banking Sector and SMMEs. Indicator SA, 18(2), 39-43.
Arauz, A., Garrat, R., & Ramos, D. (2021). Dinero Electronico: The Rise and Fall of Ecuador’s Central Bank Digital Currency. Latin America Journal of Central Banking, 2, 1-10.
Arshad, M.U., Ahmed, Z., Ramzan, A., Shabbir, M.N., Bashir, Z., & Khan, F.N. (2021). Financial Inclusion and Monetary Policy Effectiveness: A Sustainable Development Approach of Developed and Under-Developed Countries. PLOS One, 16(12), 1-19.
Auer, R., & Böhme, R. (2021). Central Bank Digital Currency: The Quest for Minimally Invasive Technology. BIS Working Paper No. 948, 1-20.
Babu, S., & Abraham, K.M. (2021). Central Bank Digital Currencies: Policy and Operational Perspectives for India. CSI Transactions on ICT, 9(2), 85-94.
Ballaschk, D., & Paulick, J. (2021). The Public, the Private and the Secret: Thoughts on Privacy in Central Bank Digital Currencies. Journal of Payments Strategy and Systems, 15(3), 277-286.
Banks Act 90 of 1994. (1994). Republic of South Africa.
Broad-Based Black Economic Empowerment Act 53 of 2003. (2003). Republic of South Africa.
Buckley, R.P, Arner, D.W, Zetzsche, D.A., Didenko, A.N., & Van Romburg, L. (2021). Sovereign Digital Currencies: Reshaping the Design of Money and Payments Systems. Journal of Payments Strategy & Systems, 15(1), 7-22.
Carrim, Y., Fubbs, J., & Wicomb, A. (2017). The Banking Association of South Africa Submission on the Transformation in the Financial Sector. The Banking Association South Africa, 1-31.
Central Bank of Nigeria Act 7 of 2007. (2007). Federal Republic of Nigeria.
Chitimira, H. (2020). Historical Aspects of the Statutory Regulation of Financial Inclusion for the Poor and Low-Income Earners. Acta Universitatis Danubias Œconomica, 16(5), 269-284.
Chitimira, H., & Magau, PT. (2021). A Legal Analysis of the Use of Innovative Technology in the Promotion of Financial Inclusion for Low-Income Earners in South Africa. PER/PELJ, 24, 1-27.
Chitimira, H., & Magau, PT. (2022). A Legal Conspectus of Some Role-Players in the Development of Financial Education in South Africa. EIRP Proceedings Journal, 17(1), 360-375.
Chitimira, H., & Ncube, M. (2020). Legislative and Other Selected Challenges Affecting Financial Inclusion for the Poor and Low-Income Earners in South Africa. Journal of African Law, 64(3), 337-355.
Chitimira, H., & Ncube, M. (2020). The Role of Regulatory Bodies and Other Role-Players in the Promotion of Financial Inclusion in South Africa. Acta Universitatis Danubias Juridica, 16(1), 7-20.
Chitimira, H., & Ncube, M. (2021). Overview Legislative Flaws Hampering the Promotion of Financial Inclusion for the Poor and Low-Income Earners in South Africa. IJEBL, 67-87.
Chitimira, H., & Munedzi, S. (2023). Overview International Best Practices on Customer Due Diligence and Related Anti-Money Laundering Measures. Journal of Money Laundering Control, 26(7), 53-62.
Consumer Protection Act 68 of 2008. (2008). Republic of South Africa.
Currency and Banking Act 31 of 1920. (1920). Republic of South Africa.
De Koker, L., & Jentzsch, N. (2013). Financial Inclusion and Financial Integrity: Aligned Incentives? World Development, 44 (C), 267-280.
Department of Trade and Industry. (2017). Codes of Good Practice: Amended Financial Sector Code (Notice No. 1325). Government Gazette, 41287, 1 December 2017.
Du Plessis, MA. (2022). Redress for Consumers in Terms of the Consumer Protection Act 68 of 2008: The Watchdog’s Failure to Support an Accredited Industry Ombud – Alternative Suggestions. Stellenbosch Law Review, 33(2), 70-90.
Financial Intelligence Centre Act 38 of 2001. (2001). Republic of South Africa.
Financial Sector Conduct Authority. (2022). Financial Sector Outlook Study 2022. https://www.fsca.co.za/Documents/FSCA%20Financial%20Sector%20Outlook%20Study%202022.pdf accessed on 15 November 2024.
Financial Sector Regulation Act 9 of 2017. (2017). Republic of South Africa.
Folwarski, M. (2021). The FinTech Sector and Aspects on the Financial Inclusion of the Society in EU Countries. European Research Studies Journal, XXIV(1), 459-467.
Gillwald, A. (2005). Good Intentions, Poor Outcomes: Telecommunications Reform in South Africa. Telecommunications Policy, 29(7), 469-491.
Girón, A., Kazemikhasragh, A., Cicchiello, A.F., & Panetti, E., (2022). Financial Inclusion Measurement in the Least Developed Countries in Asia and Africa. Journal of the Knowledge Economy, 13, 1198–1211.
Gladstein, A. (2021). Financial Freedom and Privacy in the Post-Cash World. Cato Journal, 271-293.
Goodwin, A., Howse, T., & Ramsay, I. (2017). Twin Peaks: South Africa’s Financial Sector Regulatory Framework. South African Law Journal, 134(3), 665-702.
Hamukuaya, N.H. (2021). The Development of Cryptocurrency as a Payment Method in South Africa. PER/PELJ, 24(1), 1-23.
Heydenrych. C., & Luiz, J.M. (2018). Regulatory Interaction with the Long-Term Insurance Industry in Pursuit of Market Stability and Financial Inclusion. South African Journal of Business Management, 49(1), 1-12.
Howell, B.E., & Potgieter, P.H. (2022). Effective Competition and Ineffective Mobile Industry Regulation in South Africa. Telecommunications Policy, 46(7), 1-15.
Huneberg, S. (2022). Promoting Financial Inclusion in the South African Insurance Industry: Is Insuretech the Missing Link. THRHR, 85(1), 1-20.
Intergovernmental Fintech Working Group. (2021). Position Paper on Crypto Assets. Retrieved from https://www.treasury.gov.za/comm_media/press/2021/IFWG_CAR%20WG_Position%20paper%20on%20crypto%20assets_Final.pdf.
Jacobs, W., Stoop, P., & Van Niekerk, R. (2010). Fundamental Consumer Rights Under the Consumer Protection Act 68 of 2008: A Critical Overview and Analysis. PER, 13(3), 302-406.
Li, S., & Huang, Y. (2021). The Genesis, Design and Implications of China’s Central Bank Digital Currency. China Economic Journal, 14(1), 67-77.
Louis, L., & Chartier, F. (2017). Financial Inclusion in South Africa: An Integrated Framework for Financial Inclusion of Vulnerable Communities in South Africa’s Financial Regulatory Reform System. Journal of Comparative Urban Law and Policy, 1(1), 170-196.
Magaqa, M. (2015). The NCC and the NCT Walk the Long Road to Consumer Protection. South African Mercantile Law Journal, 27(1), 32-57.
Mhlanga, D., Dunga, S.H., & Moloi, T. (2021). Understanding the Drivers of Financial Inclusion in South Africa. Journal of Economic and Financial Sciences, 14(1), 1-8
Morales-Resendiz, R., Ponce, J., Picardo, P., Velasco, A., Chen B, Sanz, L., Guiborg, G., Segendorff, B., Vasquez, J., Arroyo, J., Aguirre, I., Haynes, N., Panton, N., Griffiths, M., Pieterz, C., & Hodge, A. (2021). Implementing a Retail CBDC: Lessons Learned and Key Insights. Latin American Journal of Central Banking, 2(1), 1-10.
Moyo, D., & Hlongwane, S. (2009). Regulatory Independence and the Public Interest: The Case of South Africa’s ICASA. Journal of African Media Studies, 1(2), 279-294.
National Credit Act 34 of 2005. (2005). Republic of South Africa.
National Payment System Act 78 of 1998. (1998). Republic of South Africa.
National Treasury of South Africa, (2023). An Inclusive Financial Sector for All. Retrieved from www.treasury.gov.za/comm_media/press/2023/2023112701%20An%20Inclusive%20Financial%20Sector%20for%20all%202023.pdf.
Oberholzer, S.M., Cullen, M., & Adendorff, C. (2014). The Impact of Infrastructural Change and Regulation on Entrepreneurial Competitiveness in the South African Telecommunications Sector. South African Journal of Business Management, 45(3), 97-110.
Omar, M.A., & Inaba, K. (2020). Does Financial Inclusion Reduce Poverty and Income Inequality in Developing Countries? A Panel Data Analysis. Journal of Economic Structures, 9(37), 1-25.
Pearson, G., Stoop, P., & Kelly-Louw, M. (2017). Balancing Responsibilities – Financial Literacy. PER/PELJ, 20, 1-55.
Prasad, E. (2021). The Case for Central Bank Digital Currencies. Cato Journal, 41(2), 251-258.
Qumba, M. (2022). A Comparative Analysis of the Twin Peaks Model of Financial Regulation in South Africa and the United Kingdom. The South African Law Journal, 139(1), 78-113.
Reddy, E., and Lawack, V. (2019). An Overview of the Regulatory Developments in South Africa Regarding the Use of Cryptocurrencies. South African Mercantile Law Journal, 31(1), 1-28.
Renke, S., Roestoff, M., Haupt, F. (2007). The National Credit Act: New Parameters for the Granting of Credit in South Africa. Obiter, 28(2), 229-270.
Schmulow, A. (2020). Consumer Financial Well-Being in South Africa’s Twin Peaks Regulatory Regime: From Measurement to Confidence in Outcomes. The International Review of Financial Consumers, 5(2), 11-18.
Schoombee, A. (2004). South African Banks and the Unbanked: Progress and Prospects. South African Journal of Economics, 72(3), 581-603
Schwarcz, S.L. (2022). Regulating Digital Currencies: Towards an Analytical Framework. Boston University Law Review, 102, 1037-1081.
Seadira, B.D., & Heuva, W.E. (2021). Exclusion of South African Rural Communities from Digital Podia: A Regulatory Conundrum. Communicatio, 47(4), 72-98.
Sibanda, G. (2008). Regulatory Environment Analysis in the South African Telecommunications Industry. South African Journal of Economics, 76(2), 212-227.
South African Reserve Bank Act 29 of 1944. (1944). Republic of South Africa.
South African Reserve Bank Act 90 of 1989. (1989). Republic of South Africa.
South African Reserve Bank. (2018). The National Payment System Framework and Strategy: Vision 2025 Action Plan. Retrieved from https://www.resbank.co.za/content/dam/sarb/what-we-do/payments-and-settlements/Vision%202025%20-%20Action%20Plan.pdf.
Spruyt, W. (2018). An Assessment of the Emergent Functions of Virtual Currencies. Journal of South African Law, 4, 707-725.
Ukwueze, F.O. (2021). Cryptocurrency: Towards Regulating the Unruly Enigma of Fintech in Nigeria and South Africa. PER/PELJ, 24(1), 1-38.
Van Heerden, C.M., Van Niekerk, G.M., & Huls, N.J.H. (2020). Two Takes on Twin Peaks: A Comparative Appraisal of the Models of Financial Regulation in the Netherlands and South Africa. THRHR, 83, 491-513.
Van Niekerk, M.G. & Phaladi, N.H. (2021). Digital Financial Services: Prospects and Challenges. PER Journal, 24, 1-25.
Verhoef, G. (2000). Community Banking for Development: The Case of Community Bank in Comparative Perspective 1994-1996. South African Journal of Economic History, 15(1-2), 134-158.
Vermeulen, C., (2021). One Hundred Years of Private Shareholding in the South African Reserve Bank. Economic History of Developing Regions, 36(2), 245-263.
Wentzel, J.P, Diatha, K.S., & Yadavalli, V.S.S. (2016). An Investigation into Factors Impacting Financial Exclusion at the Bottom of the Pyramid in South Africa. Development Southern Africa, 33(2), 203-214.
Whittaker, M. (2008). South Africa’s National Credit Act: Possible Model for the Proper Role of Interest Rate Ceilings for Microfinance. Northwestern Journal of International Law & Business, 28(3), 561-582.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Keamogetse Motlogeloa, Howard Chitimira
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
