{"id":20586,"date":"2025-03-24T17:46:06","date_gmt":"2025-03-24T18:46:06","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=20586"},"modified":"2025-03-25T04:06:40","modified_gmt":"2025-03-25T04:06:40","slug":"editors-note-the-case-for-rethinking-south-africas-strategic-reserves-in-a-digital-age","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/editors-note-the-case-for-rethinking-south-africas-strategic-reserves-in-a-digital-age\/","title":{"rendered":"Editor’s Note: The case for rethinking South Africa’s strategic reserves in a digital age"},"content":{"rendered":"

This post<\/a> was originally published on this site<\/a><\/p>

<\/p>\n

A technological revolution is sweeping global finance, and it\u2019s shaking up traditional monetary policy. The US is championing stablecoins, China is pressing ahead with its digital yuan, and our BRICS partners – India, Russia, Brazil – are zoning in on the new wave of digital innovation. This shift isn\u2019t merely reshaping legacy currencies – it\u2019s stamping a digital footprint on money itself, upending decades of tradition.<\/p>\n

But in South Africa, SA Reserve Bank (SARB) Governor<\/span> Lesetja Kganyago is taking a cautious stance on central bank reserves as he champions gold\u2019s enduring appeal. His prudence is not misplaced, yet it prompts a pressing question: can he afford to delay rethinking our reserves?<\/p>\n

With debt tied to the dollar, our BRICS partners being innovative, and peers racing ahead, shouldn’t South Africa embrace this digital tide before it is left behind and poorer in the pocket?<\/p>\n

Global movements<\/strong><\/p>\n

The US is driving the charge. Under US President Donald Trump, stablecoins – such as Tether (USDT) and USD Coin (USDC) – are the most prominent. Pegged to the dollar, they sidestep Bitcoin\u2019s wild swings, harnessing blockchain to deliver a digital dollar with global reach. <\/p>\n

Stablecoins, as defined by the US Treasury, are cryptocurrencies designed to maintain a stable value, typically pegged to a fiat currency like the dollar at a 1:1 ratio. Distinct from Bitcoin\u2019s volatility, they enable rapid digital transactions\u2014such as cross-border payments\u2014while retaining reliability, backed by reserves like cash or Treasury securities.<\/p>\n

Trump’s March 6 executive order launched a Strategic Bitcoin Reserve, but stablecoins, backed by US David Sacks and Howard Lutnick, steal the spotlight. Sacks and Lutnik are  tied to Trump\u2019s administration:  Sacks driving AI and crypto policy and Lutnick overseeing commerce and trade. They aim to cement dollar supremacy. This as the BRICS are set on de-dollarization.<\/p>\n

With $300 billion (R5.7 trillion) in circulation, this adoption of digital innovation signals an unstoppable shift in the forex landscape. The speculation that gold may not be stored in vaults, such as Fort Knox, is not exactly reassuring. <\/span>There is such non-transparency of the physical assets held by central banks that gold could already be more blockchain than solid bullion. Until central banks are more transparent and properly audited the public will never know.<\/p>\n

China\u2019s approach is no less transformative. China is aggressive in not being left behind and is extremely strong on digital innovation and diversifying legacy instruments with new tech. Its digital yuan, or e-CNY, flows from the People\u2019s Bank of China – not a stablecoin, but a state-run digital currency. Since 2020, it has tallied over $1 trl  in transactions, spanning local markets and cross-border trade, embedding a digital footprint in the yuan\u2019s legacy.<\/p>\n

India\u2019s digital rupee, piloted since 2022, serves 5 million users, streamlining payments with cutting-edge efficiency. Russia\u2019s digital ruble, live since 2023, explores gold backing to skirt sanctions. Brazil\u2019s Drex, due in 2025, promises rapid trade settlements. BRICS peers are not merely adopting technology – they\u2019re thinking outside the box and embracing it.<\/p>\n

South Africa as a BRICS member should be doing the same. We have talented people in the country to drive this.<\/p>\n

Kganyago is dovish<\/strong><\/p>\n

At the World Economic Forum in January, Kganyago took aim at cryptocurrency reserve talk, \u201cI would have a significant problem with a lobby that says governments should hold this asset or that asset without consideration for what the strategic intent of government is. There is a history to gold; currencies were once pegged to gold. If we now say Bitcoin is the standard, what about platinum? What about coal? Why don\u2019t we hold strategic beef reserves, mutton reserves, or apple reserves? Why Bitcoin?\u201d<\/p>\n

I was very dismayed that he said this in the global arena as this to me reflects ossified thinking.<\/p>\n

\n
<\/div>\n

But to the SARB governor’s credit he\u2019s not entirely wrong: Bitcoin\u2019s wild gyrations in 2024 hardly inspire trust. Yet stablecoins, and these new BRICS tokens herald a digital overhaul of money onto safer ground that Kganyago\u2019s caution may undervalue.<\/p>\n

And I ask if we can afford not to be watching the latest developments with hawk eyes.<\/p>\n

South Africa\u2019s position demands scrutiny. Our  massive external debt, with a large bulk of it in dollars, leaves us exposed.  As every investor will tell you, “When America sneezes, the world catches a cold.”<\/b><\/p>\n

Trump and his tech geniuses are saying that stablecoins will herald a stronger dollar. How much will it affect the rand if stablecoins do what the US says it will. South Africa has gold reserves and, as of January 31, 2025, these were valued at $11.315bn<\/span>, but this won’t provide a big enough cushion to a much stronger dollar. <\/p>\n

Sacks\u2019 case for a digital reserve<\/h2>\n

Sacks, Trump\u2019s crypto czar, has made a very strong case why the stakes are so high. At a February 4, 2025, press conference, he said: \u201cStablecoins have the potential to ensure American dollar dominance internationally to increase the usage of the US dollar digitally as the world\u2019s reserve currency, and in the process create potentially trillions of dollars of demand for US Treasuries, which could lower long-term interest rates.\u201d<\/p>\n

Sacks also elaborated on CNBC\u2019s “Closing Bell Over Time”<\/a>,  \u201cThey are very committed to moving legislation through the House and the Senate this year in order to provide that clear regulatory framework that the digital assets ecosystem needs to sustain innovation in the United States. Moving legislation through Congress takes time, but I think this is something we could do in the next six months.\u201d<\/p>\n

The pace of this shift – legacy currency digitised –  is alarming. His vision also ties digital adoption to global power, which signals an unprecedented disruptive reserve strategy.<\/p>\n

He added at the press conference, \u201cWe want that value creation to happen in the United States rather than giving it away to other countries.\u201d He continued, \u201cThis will also, I should add, be much better for consumer protection.\u201d<\/p>\n

In summary, South Africa is facing a monetary policy moment of reckoning. The grass is certainly not growing under the Trump administration\u2019s feet, and we risk getting trampled on if we don\u2019t move it.<\/p>\n

This is a bit like watching the Springboks at the Rugby World Cup with their team all on the offensive. I am a very sporadic rugby watcher, but imagine how great it would be for our monetary policy team to get into the shoes of Cheslin Kolbe and Faf de Klerk and surprise on the upside.<\/p>\n

Are we going to be on the field and agile for the new game in town?<\/p>\n

However, I have my doubts. South Africa is too often one long talk shop that gets left behind through lack of implementation. But this is not something we can be inactive on. It is imperative that South Africa be proactive if we don\u2019t want the rand and our economy to be on the back foot.<\/p>\n

The SARB might consider forming a small brains trust, tapping innovators like Michael Jordaan, Charles Savage, and Luno SA\u2019s Marius Reitz, to advise on this digital shift. (I am no crypto expert, so this is my uninformed list.) We need local experts to illuminate the path ahead. We cannot afford to be ostriches. And there is no need to be. South Africa is rich in tech-savvy experts. Please note this is not another bureaucratic committee but a strong business initiative with timelines to give our country a fighting chance in this digital new playing field.<\/p>\n

To share a personal anecdote, last year, I didn\u2019t want to fork out the money on a newish car\u2014my priority was saving for my children\u2019s education amid the high cost of living. So, I opted for financial prudence. I did a full service on my old Chev, and off I went, a single mum with two teenagers, bound for Durban and beyond. But 30 kilometers shy of Kokstad, the car broke down on the side of the road, which was not safe. Although we were okay and had an adventure of sorts, it was a very costly exercise that made me relook at my judgment-making.<\/p>\n

Looking back, I realized that after Covid-19 and escalating costs, I am guilty of deprivation thinking – making do with what\u2019s \u201cgood enough\u201d -but that can backfire spectacularly. Thus, clinging to the old monetary chassis, much like I did with my car, might feel safe\u2014until it\u2019s not. Playing it too safe can endanger what you\u2019re trying to protect.<\/p>\n

The global economy is accelerating toward digital finance, and South Africa risks being left on the roadside, exposed to missed opportunities.<\/p>\n

Sometimes, playing it safe isn\u2019t prudent – it\u2019s betting on the future that counts. Fortune favors the bold, and with South Africa\u2019s coffers empty, we can\u2019t afford to sit still.<\/p>\n

\n
Philippa Larkin, is the executive edior of Business Report. <\/figcaption><\/figure>\n
\n

Philippa Larkin is executive editor of Business Report.<\/em><\/p>\n

\n

BUSINESS REPORT<\/strong><\/p>","protected":false},"excerpt":{"rendered":"

A technological revolution is sweeping global finance, and it\u2019s shaking up traditional monetary policy. The US is championing stablecoins, China is pressing ahead with its digital yuan, and our BRICS partners – India, Russia, Brazil – are zoning in on the new wave of digital innovation. This shift isn\u2019t merely reshaping legacy currencies – it\u2019s stamping a digital footprint on money itself, upending decades of tradition.But in South Africa, SA Reserve Bank (SARB) Governor Lesetja Kganyago is taking a cautious stance on central bank reserves as he champions gold\u2019s enduring appeal. His prudence is not misplaced, yet it prompts a pressing question: can he afford to delay rethinking our reserves?With debt tied to the dollar, our BRICS partners being innovative, and peers racing ahead, shouldn’t South Africa embrace this digital tide before it is left behind and poorer in the pocket?Global movementsThe US is driving the charge. Under US President Donald Trump, stablecoins – such as Tether (USDT) and USD Coin (USDC) – are the most prominent. Pegged to the dollar, they sidestep Bitcoin\u2019s wild swings, harnessing blockchain to deliver a digital dollar with global reach.\u00a0Stablecoins, as defined by the US Treasury, are cryptocurrencies designed to maintain a stable value, typically pegged to a fiat currency like the dollar at a 1:1 ratio. Distinct from Bitcoin\u2019s volatility, they enable rapid digital transactions\u2014such as cross-border payments\u2014while retaining reliability, backed by reserves like cash or Treasury securities.Trump’s March 6 executive order launched a Strategic Bitcoin Reserve, but stablecoins, backed by US David Sacks and Howard Lutnick, steal the spotlight. Sacks and Lutnik are\u00a0 tied to Trump\u2019s administration:\u00a0 Sacks driving AI and crypto policy and Lutnick overseeing commerce and trade. They aim to cement dollar supremacy. This as the BRICS are set on de-dollarization.With $300 billion (R5.7 trillion) in circulation, this adoption of digital innovation signals an unstoppable shift in the forex landscape. The speculation that gold may not be stored in vaults, such as Fort Knox, is not exactly reassuring. There is such non-transparency of the physical assets held by central banks that gold could already be more blockchain than solid bullion. Until central banks are more transparent and properly audited the public will never know.China\u2019s approach is no less transformative. China is aggressive in not being left behind and is extremely strong on digital innovation and diversifying legacy instruments with new tech. Its digital yuan, or e-CNY, flows from the People\u2019s Bank of China – not a stablecoin, but a state-run digital currency. Since 2020, it has tallied over $1 trl\u00a0 in transactions, spanning local markets and cross-border trade, embedding a digital footprint in the yuan\u2019s legacy.India\u2019s digital rupee, piloted since 2022, serves 5 million users, streamlining payments with cutting-edge efficiency. Russia\u2019s digital ruble, live since 2023, explores gold backing to skirt sanctions. Brazil\u2019s Drex, due in 2025, promises rapid trade settlements. BRICS peers are not merely adopting technology – they\u2019re thinking outside the box and embracing it.South Africa as a BRICS member should be doing the same. We have talented people in the country to drive this.Kganyago is dovishAt the World Economic Forum in January, Kganyago took aim at cryptocurrency reserve talk, \u201cI would have a significant problem with a lobby that says governments should hold this asset or that asset without consideration for what the strategic intent of government is. There is a history to gold; currencies were once pegged to gold. If we now say Bitcoin is the standard, what about platinum? What about coal? Why don\u2019t we hold strategic beef reserves, mutton reserves, or apple reserves? Why Bitcoin?\u201dI was very dismayed that he said this in the global arena as this to me reflects ossified thinking.But to the SARB governor’s credit he\u2019s not entirely wrong: Bitcoin\u2019s wild gyrations in 2024 hardly inspire trust. Yet stablecoins, and these new BRICS tokens herald a digital overhaul of money onto safer ground that Kganyago\u2019s caution may undervalue.And I ask if we can afford not to be watching the latest developments with hawk eyes.South Africa\u2019s position demands scrutiny. Our\u00a0 massive external debt, with a large bulk of it in dollars, leaves us exposed.\u00a0 As every investor will tell you, “When America sneezes, the world catches a cold.”Trump and his tech geniuses are saying that stablecoins will herald a stronger dollar. How much will it affect the rand if stablecoins do what the US says it will. South Africa has gold reserves and, as of January 31, 2025, these were valued at $11.315bn, but this won’t provide a big enough cushion to a much stronger dollar.\u00a0Sacks\u2019 case for a digital reserveSacks, Trump\u2019s crypto czar, has made a very strong case why the stakes are so high. At a February 4, 2025, press conference, he said: \u201cStablecoins have the potential to ensure American dollar dominance internationally to increase the usage of the US dollar digitally as the world\u2019s reserve currency, and in the process create potentially trillions of dollars of demand for US Treasuries, which could lower long-term interest rates.\u201dSacks also elaborated on CNBC\u2019s “Closing Bell Over Time”,\u00a0 \u201cThey are very committed to moving legislation through the House and the Senate this year in order to provide that clear regulatory framework that the digital assets ecosystem needs to sustain innovation in the United States. Moving legislation through Congress takes time, but I think this is something we could do in the next six months.\u201dThe pace of this shift – legacy currency digitised –\u00a0 is alarming. His vision also ties digital adoption to global power, which signals an unprecedented disruptive reserve strategy.He added at the press conference, \u201cWe want that value creation to happen in the United States rather than giving it away to other countries.\u201d He continued, \u201cThis will also, I should add, be much better for consumer protection.\u201dIn summary, South Africa is facing a monetary policy moment of reckoning. The grass is certainly not growing under the Trump administration\u2019s feet, and we risk getting trampled on if we don\u2019t move it.This is a bit like watching the Springboks at the Rugby World Cup with their team all on the offensive. I am a very sporadic rugby watcher, but imagine how great it would be for our monetary policy team to get into the shoes of Cheslin Kolbe and Faf de Klerk and surprise on the upside.Are we going to be on the field and agile for the new game in town?However, I have my doubts. South Africa is too often one long talk shop that gets left behind through lack of implementation. But this is not something we can be inactive on. It is imperative that South Africa be proactive if we don\u2019t want the rand and our economy to be on the back foot.The SARB might consider forming a small brains trust, tapping innovators like Michael Jordaan, Charles Savage, and Luno SA\u2019s Marius Reitz, to advise on this digital shift. (I am no crypto expert, so this is my uninformed list.) We need local experts to illuminate the path ahead. We cannot afford to be ostriches. And there is no need to be. South Africa is rich in tech-savvy experts. Please note this is not another bureaucratic committee but a strong business initiative with timelines to give our country a fighting chance in this digital new playing field.To share a personal anecdote, last year, I didn\u2019t want to fork out the money on a newish car\u2014my priority was saving for my children\u2019s education amid the high cost of living. So, I opted for financial prudence. I did a full service on my old Chev, and off I went, a single mum with two teenagers, bound for Durban and beyond. But 30 kilometers shy of Kokstad, the car broke down on the side of the road, which was not safe. Although we were okay and had an adventure of sorts, it was a very costly exercise that made me relook at my judgment-making.Looking back, I realized that after Covid-19 and escalating costs, I am guilty of deprivation thinking – making do with what\u2019s \u201cgood enough\u201d -but that can backfire spectacularly. Thus, clinging to the old monetary chassis, much like I did with my car, might feel safe\u2014until it\u2019s not. Playing it too safe can endanger what you\u2019re trying to protect.The global economy is accelerating toward digital finance, and South Africa risks being left on the roadside, exposed to missed opportunities.Sometimes, playing it safe isn\u2019t prudent – it\u2019s betting on the future that counts. Fortune favors the bold, and with South Africa\u2019s coffers empty, we can\u2019t afford to sit still.Philippa Larkin, is the executive edior of Business Report. Philippa Larkin is executive editor of Business Report.BUSINESS REPORT<\/p>","protected":false},"author":1,"featured_media":20588,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-20586","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/20586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=20586"}],"version-history":[{"count":3,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/20586\/revisions"}],"predecessor-version":[{"id":20591,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/20586\/revisions\/20591"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/20588"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=20586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=20586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=20586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}