South Africa’s Central Reserve Bank has received a major global banking award for its interbank payments system based on the Ethereum blockchain network.

The Central Banking – a global central banking forum – FinTech and RegtTech Award for Best Distributed Ledger Initiative was awarded to the South African central bank for its successful Project Khokha. This is based on JP Morgan’s Quorum network, an offshoot of the Ethereum blockchain, and was designed, built and completed in under three months.

A system to evaluate performance

The Reserve Bank first launched the system to evaluate performance and efficiency, scalability, privacy, resilience and finality of a blockchain solution.

Various banks participated in the trial of the system and each of them was responsible for setting up their own node and the payments were processed with a digital token of the African country’s fiat currency, the rand, backed by central bank deposits.

The success of Khokha

The Khokha system proved to be capable of scaling up from 70,000 transactions a day to 200,000. The Reserve Bank had a goal of 95% of transactions validated in under a second and 99% in less than two seconds. Another goal was to process one full day’s trading in just two hours.

However, the main aim was to process the transactions successfully while complying with the Principles for Financial Market Infrastructures. Other goals were performance, transaction times, security and privacy.

Central Banking said during the award ceremony that it is important for “regulators to work together to safeguard the financial system without stifling innovation”.