Central Bank Digital Currencies and Cross-Border Payments in Southern Africa

The chapter examines the challenges to the main models of cross-border payments and considers how central bank digital currencies (CBDCs) can improve cross-border payments in Africa to facilitate intra-African trade. Towards this objective, the chapter presents an overview of South Africa’s National Payment System (NPS), the Southern African Development Community Real-Time Gross Settlement System (SADC-RTGS) and the Pan-African Payment and Settlement System (PAPSS). It further reviews three models—compatibility model, interlinking model and unified system model for multi-CBDC—used for adopting CBDCs for cross-border payments. The chapter concludes that the unified system model is the better alternative for the SADC region and recommends measures to ensure the seamless integration of CBDCs into the SADC-RTGS system.