Page 24 - PROJECT KHOKHA 2

THE PROOF-OF-CONCEPT
Debenture token market activities
The next section discusses some of the debenture token market activities for the different prototypes depicted in the overview provided in Figure 7 below.
Figure 7: Overview of debenture token market activities
wCBDC Engine
Activities
• Buy wCBDC (SAMOS)
• Send and receive wCBDC
• Sell wCBDC (SAMOS)
• Export wCBDC to Khokha Hub
Primary market
Debenture auction/issue
Activities
Debenture maturity
Activities
Khokha Token creation
Activities
• Earmark SAMOS funds
• Set up netting facilities
• Mint Khokha Token
• Trade Khokha Token
Secondary market
Khokha Token redemption
Activities
• Burn Khokha Tokens
• Release SAMOS funds
• Redeem Khokha Tokens
• Make netting payments
Secondary trade
Activities
• Secondary debenture trade
• Create FDM Tokens
• Create FDM ask orders
• Khokha Token matching
• Simulate • debenture auction process •
• Pay for debentures •
• Receive debentures •
Verify maturity report Maturity payment Verify maturity receipt Transfer wCBDC off Khokha Hub
Wholesale central bank digital currency functionality
The issuing of wCBDC
wCBDC was issued to commercial banks when they bought it with money from their settlement account in the SAMOS system. The wCBDC can be sold back to the SARB as and when required.
Using wCBDC to settle securities trades
wCBDC tokens were designed to carry a
direct and fungible claim on the SARB and
are recorded as an asset on the token holder’s balance sheet. This means that when a wCBDC is transferred from one participant to another, the associated claim on the central bank is transferred with the token. In the PoC, this not only effected the function of payment, but also impacted legal and operational settlement. According to South African legislation, settlement in a designated settlement system is final and irrevocable. In the PoC, wCBDC
is ported to the Khokha Hub to facilitate purchasing of debentures in the primary market where operational settlement occurred. The wCBDC Zone, for purposes of the PoC,
is considered to be a designated settlement system as the platform on which central bank wholesale money is issued; however, Khokha Hub, as a more commercial construct, is not. This means that, if such a model is adopted in a future world, legal settlement would only occur once transactions are settled in the wCBDC Zone. The ability to port (export and
6 import) wCBDC from its native network –
that is, the wCBDC Zone to a non-native network(i.e. the Khokha Hub) – requires that
its use be restricted in line with its use on its native network, including restricting its use to only SAMOS settlement participants on the non-native network. Certain functionality, such as purchasing wCBDC from, or selling it back to, the SARB was only available on the
wCBDC Zone.
6 Native network refers to the network upon which a token is issued on and is inherent to.
24 PROJECT KHOKHA 2