The case for rethinking South Africa's strategic reserves in the digital age

A TECHNOLOGICAL revolution is sweeping global finance, and it’s shaking up traditional monetary policy.

- PHILIPPA LARKIN

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’t merely reshaping legacy currencies - it’s 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’s 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 movements

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’s wild swings, harnessing blockchain to deliver a digital dollar with global reach.

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’s volatility, they enable rapid digital transactions—such as cross-border payments—while 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 Lutnick are tied to Trump's administration: Sacks driving Al and crypto policy and Lutnick overseeing commerce and trade. They aim to cement dollar supremacy. This as the BRICS are set on de-dollarization.