By Daniel Makina and Rogers Dhliwayo
“Stablecoins and CBDCs are shaping the future of money, redefining payment networks, and forcing the industry to rethink the traditional banking model.”
As geopolitical tides shift and economic nationalism resurfaces, traditional trade and financial systems are being stress-tested. The United States’ imposition of punitive tariffs on South African exports in 2025 echoes an earlier era of protectionism and disrupts the fragile economic recovery in the global South. Amidst these shocks, new digital financial tools; most notably stablecoins and central bank digital currencies (CBDCs) are emerging as both shields and sails. These instruments, though still evolving, hold promise to increase trade resilience, enhance monetary sovereignty, and bypass frictions in cross-border financial flows. Their adoption could reduce trade tensions by creating more transparent, efficient, and inclusive financial ecosystems.
This paper explores the implications of the U.S. tariff escalation for South Africa and assesses how digital currencies, private and sovereign can be strategically deployed to buffer the economy and reposition the country within a volatile global trade architecture.
U.S. Tariffs and South Africa: Repeating History or a Catalyst for Reform?
The U.S. decision to impose a sweeping 30% tariff on South African goods, citing ‘unfair trade practices’ has sent shockwaves through Pretoria’s economic and policy circles. South Africa’s key export sectors such as automotive components, citrus fruit, and precious metals are particularly exposed. The estimated revenue loss exceeds R50 billion in 2025, further straining an economy still reeling from power outages, fiscal pressures, and high unemployment, according to the Inclusive Society Institute.
The likely economic fallout from these tariffs is considerable. A contraction in export earnings is expected to exert significant downward pressure on the rand, widen the current account deficit, and fuel imported inflation, thereby eroding household purchasing power and raising the cost of doing business. These dynamics could, in turn, dampen investor sentiment, trigger capital outflows, and increase volatility in domestic bond markets. The cumulative impact risks a deterioration in macroeconomic stability, further complicating fiscal consolidation efforts and undermining the momentum of South Africa’s post-pandemic recovery.
Given the gravity of these risks, the South African Reserve Bank (SARB) would be well advised to explore innovative macro-financial instruments to bolster the country’s resilience in an increasingly uncertain global environment. Among the emerging options, stablecoins and CBDCs stand out not merely as digital novelties, but as potentially transformative tools for safeguarding trade flows, mitigating currency mismatches, and enhancing the speed, cost, and transparency of cross-border payments. If appropriately regulated and thoughtfully implemented, these digital financial instruments could also foster broader financial inclusion, reinforce monetary sovereignty, and enable South Africa to more effectively navigate the complexities of a shifting geopolitical and trade landscape.
Digital Currencies 101: Understanding Stablecoins and CBDCs
Stablecoins are privately issued digital assets pegged to a stable value, often a fiat currency like the U.S. dollar. These include:
- Fiat-collateralized stablecoins (e.g., USD Coin – USDC and Tether – USDT), backed 1:1 by fiat reserves.
- Crypto-collateralized stablecoins (e.g., Decentralized Autonomous Issuance – DAI), backed by overcollateralized digital assets.
- Algorithmic stablecoins, which adjust supply via code, but are highly unstable (e.g., TerraUSD collapse).
CBDCs, by contrast, are sovereign digital currencies issued by central banks. They are legal tender and represent a digital form of fiat money. Unlike stablecoins, CBDCs are state-backed and can be used for retail or wholesale purposes, depending on their design.
The key distinction lies in their governance and issuance model: stablecoins are market-driven and potentially global in scale, while CBDCs are state-controlled and policy-driven. However, both share the potential to modernize payment infrastructure, enhance financial inclusion, and support monetary policy transmission.
Global Regulatory Shifts: GENIUS Act and the CBDC Surge
In July 2025, the U.S. passed the GENIUS Act, which mandates strict regulatory standards for stablecoins, viz: full reserve backing, independent audits, and licensing under a federal regime. The legislation aims to consolidate the U.S. dollar’s dominance in the digital era by providing a regulatory runway for dollar-pegged stablecoins, according to the Cato Institute. This coincides with growing U.S. interest in a digital dollar, with the Federal Reserve exploring pilot CBDC projects.
The IMF observes that the global CBDC landscape is rapidly evolving. Over 130 countries are now researching or piloting CBDCs. China’s e-CNY is the most advanced large-scale pilot. In Africa, Nigeria’s eNaira and Ghana’s eCedi provide instructive lessons. However, while technologically feasible, uptake has been hindered by low financial literacy, trust deficits, and infrastructure gaps.
The European Union’s MiCA Regulation and Japan’s guidelines for stablecoin issuance further illustrate the global convergence toward digital currency regulation. For South Africa, this global momentum underscores the urgency for proactive domestic policy alignment.
Strategic Implications for South Africa: Stablecoins and CBDCs as Tools of Trade and Resilience
As South Africa confronts escalating external shocks, most recently the imposition of U.S. tariffs, it should reimagine the architecture of its financial system to enhance resilience, reduce exposure to foreign exchange volatility, and promote inclusive growth. Digital currencies, in particular stablecoins and CBDCs present emerging policy tools that can complement traditional macroeconomic instruments. These innovations hold significant potential to transform the country’s trade facilitation systems, strengthen monetary sovereignty, and bridge long-standing financial access gaps. A strategic and well-regulated approach to digital currency adoption could position South Africa at the forefront of financial innovation among emerging markets.
Mitigating trade frictions: One of the most immediate advantages of stablecoins is their ability to facilitate real-time, cross-border payment settlements without the delays and high costs associated with traditional correspondent banking systems. For South African exporters; especially small and medium-sized enterprises (SMEs) – this could substantially reduce foreign exchange conversion costs and transaction bottlenecks. In an era of heightened trade tensions, the capacity to settle payments swiftly and securely using fiat-backed stablecoins, such as USD Coin (USDC), Tether (USDT), or a future rand-pegged stablecoin, could provide a buffer against exchange rate volatility and liquidity constraints.
CBDCs and regional payment integration: CBDCs offer a state-sanctioned alternative with similar capabilities, especially if designed with cross-border functionality from the outset. Collaborative CBDC development between South Africa and its BRICS+ partners could enable interoperable digital settlement systems that bypass dollar-dominated channels. The ongoing BRICS+ dialogue on establishing a common settlement mechanism for trade and investment flows presents a timely opportunity to integrate CBDCs into regional trade facilitation efforts, potentially enhancing autonomy and efficiency in intra-regional transactions.
Reinforcing monetary sovereignty and inflation buffering: A digital rand issued by the South African Reserve Bank (SARB) could enhance the central bank’s control over money supply and improve the transmission of monetary policy. By digitizing physical cash and reducing dependence on private payment networks, a CBDC could offer more direct and effective channels for implementing interest rate changes and fiscal interventions.
Managing currency stress and safeguarding monetary autonomy: In periods of currency stress induced by external shocks such as punitive trade tariffs, CBDCs could help stabilize domestic transactions by providing a secure, traceable, and programmable form of legal tender. Meanwhile, dollar-backed stablecoins like USDC or USDT can offer businesses and consumers a short-term hedge against rand depreciation. However, over-reliance on foreign-denominated stablecoins risks undermining SARB’s monetary policy autonomy. This reinforces the importance of promoting a domestically issued and well-regulated digital currency that serves national objectives while remaining interoperable with global digital finance systems.
- Advancing financial inclusion and digital infrastructure: Digital currencies, in particular CBDCs also offer a unique opportunity to advance financial inclusion. In South Africa, where a significant portion of the population remains unbanked or underbanked, a retail CBDC accessible through mobile platforms could provide a secure and low-cost gateway into the formal financial system. Such a solution could accelerate the digitization of the informal economy, facilitate micro-savings and access to credit, and streamline the distribution of government-to-person (G2P) transfers, including social grants.
- Supporting regional trade and remittances: Stablecoins, when governed by a sound regulatory framework, can complement these efforts by enabling low-cost, mobile-based remittances and trade payments, in particular for South Africa’s regional traders and diaspora communities. By reducing reliance on volatile cash-based transactions and high-cost remittance corridors, stablecoins could help lower transaction costs and support deeper financial integration under the African Continental Free Trade Area (AfCFTA).
Policy Recommendations for a Resilient Digital Future
To unlock the potential of stablecoins and CBDCs amid trade tensions, South Africa should consider the following policy steps:
- Establish a regulatory sandbox under the FSCA and SARB to pilot stablecoins and test interoperability with CBDCs, ensuring safeguards for consumers and systemic stability.
- Accelerate SARB’s exploration of a digital rand, learning from Nigeria and Ghana, and ensure public-private collaboration to enhance usability and trust.
- Promote regional collaboration under AfCFTA and BRICS+ frameworks to develop cross-border CBDC protocols and harmonized regulatory frameworks for stablecoins.
- Mandate reserve transparency and independent audits for any stablecoin issuer operating in South Africa, aligned with GENIUS and MiCA principles.
- Integrate digital currencies into South Africa’s trade facilitation platforms, enabling exporters to transact using programmable money with traceability, security, and speed.
- Educate the public and businesses on digital currency use cases, risks, and rights, ensuring equitable access and informed adoption.
Conclusion
The escalating trade friction with the United States may well mark a turning point for South Africa, not only in its foreign economic policy, but in its financial architecture. Stablecoins and CBDCs offer more than technical innovation; they offer a lifeline to rethink resilience, trade facilitation, and inclusive economic transformation. By embracing this wave of financial innovation within a prudent and forward-looking regulatory framework, South Africa can anchor its economy against external shocks and reimagine its role in a digital, multipolar world. Like rivers that shift their course after storms, the country should adapt its financial systems to flow with the new currents of global commerce.
Daniel Makina and Rogers Dhliwayo are editors of Economic Business Insights.
