Page 7 - PROJECT KHOKHA 2 SUMMARY PROJECT REPORT

OVERVIEW OF PROJECT KHOKHA 2
Exploration around the issuance of both public and private ‘money’1 has shifted greatly since the SARB published the PK1 report in 2018. Several central banks are exploring wCBDC and the impact of DLT on financial markets in
a manner that supports tokenisation. In the context of PK2, tokenisation
refers to the growing trend of issuing financial assets in the form of a DLT- based token, with DLT as the supporting technical infrastructure. Against this background, PK2 aims to further broaden the existing body of knowledge by exploring issuing multiple assets on DLT and their interoperability as part of the third wave of wCBDC-focused central bank innovation.
PK2 was formally launched during February 2021 as an IFWG Innovation Accelerator project, and this was led by the SARB.
OVERVIEW OF PK2
The PoC sought to explore the following primary opportunities:
• Lowering the barrier to entry for new market entrants
by using DLT to reduce the minimum infrastructure requirements, systems costs and operational requirements for participation.
• Simplifying the reconciliation requirements in the settlement processes of all parties, including new capacity such as transparent visibility of market liabilities against a trading member or specific security held by a trading member, by consolidating several current market infrastructure components onto a single shared ledger.
• Enabling innovation opportunities through DLT-based securities trading and helping to prepare local markets for growing global adoption of wCBDC and other tokenised securities. This would lay the foundation for interoperability between DLT networks (private, permissioned and even public) and their applications – especially in expanding the utility of wCBDC on multiple networks.
1
In the South African context, ‘money’ is defined in the National Payment System Act 78 of 1998 as “a banknote or coin issued by the [South African] Reserve Bank in terms of section 10 (1)(a) (iii), read with section 14 of the South African Reserve Bank Act 90 of 1989”. The reference here, particularly to private ‘money’, is therefore money in the broadest sense of the term and denotes non-central bank issued instruments that aim to function as payment instrument.
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