Last week South Africa announced Project Khokha 2 to explore the use of both a wholesale central bank digital currency (CBDC) and a wholesale settlement token, in other words, for interbank use.
Whereas mainstream stablecoins persist over time and can be held as digital money, settlement tokens are only intended to be held for the short term. So bank cash is tokenized, a payment is made and the token is converted back to cash in another bank account. Tokenization enables instant on-chain settlement or delivery versus payment.
The trial will explore using both forms of tokenized money to settle debenture or bond transactions, which will be issued, settled and cleared on a permissioned blockchain. The minimum viable product (MVP) will be used to inform policy decisions and regulation. One of those is interoperability.
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