South Africa’s Central Bank Pilots Tokenized Fiat Interbank Payment System

South Africa’s Central Bank (SARB) has successfully piloted a Proof-of-Concept (PoC) for an interbank payment system that tokenizes fiat using Quorum, according to an SARB press release published June 5th. Quorum is an Ethereum-based private blockchain.

According to SARB’s report on the pilot, dubbed ‘Project Khokha,’ all of the bank’s goals were successfully achieved, the primary aim being “to build a proof of-concept (PoC) wholesale payment system for interbank settlement using a tokenized South African rand on distributed ledger technology (DLT).”

The project further aimed to investigate the “interconnected” issues of the platform’s scalability, resilience, confidentiality, and finality.

Seven South African banks participated in the trial, with blockchain incubator ConsenSys as technical partner and international audit and accounting firm PricewaterhouseCoopers Inc. (PwC) as a support partner.

SARB centrally coordinates South Africa’s existing Real Time Gross Settlement System(SAMOS), which operates on a 24/7/365 basis to settle all interbank obligations on a real-time basis in central-bank money.

The system piloted in Project Khokha is disintermediated – with each bank responsible for configuring its own node on the network – and would mint tokens on a blockchain rather than printing fiat to settle banks’ asset obligations.

Specifically, the trial tested a version of Quorum that uses an Istanbul Byzantine Fault Tolerance (IBFT) consensus mechanism, testing two encryption methods – Pedersen commitments and range proofs – that SARB claims have never before been used on a Quorum network using IBFT…

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