The rand-backed stablecoin ZAR Universal (ZARU) has been launched with the aim of linking South Africa’s currency to the global digital economy, although it will initially be limited to institutional users, News24 reports.

ZARU was introduced through a collaboration between Luno, Sanlam (JSE:SLM), EasyEquities, and Lesaka Technologies (NASDAQ:LSAK). It became available to qualified institutional investors from February 3 via the Luno and EasyEquities trading desks. Retail access is planned in a later, phased rollout.

The stablecoin is pegged one-for-one to the South African rand (ZAR) and is designed to facilitate faster, lower-cost payments and transfers by using blockchain infrastructure. While ZARU can be traded internationally, its underlying reserves are rand-denominated and held within South Africa’s financial system.

Supporters say the product could help modernise payments, cross-border trade and remittances involving the rand, which have traditionally been constrained by banking hours and high transaction fees. Blockchain-based settlement allows for near-instant, 24/7 transactions.

Luno CEO James Lanigan described ZARU as a milestone for South Africa’s digital economy, according to News24, saying it is designed to make payments and money transfers faster and cheaper while being backed by secure reserves that support the local financial system.

Each ZARU token is backed by liquid rand assets, including cash, bank deposits and South African government bonds. These reserves are managed by Sanlam Specialised Asset Management under an asset-liability management agreement.

The backing assets are held by Standard Bank (JSE:SBK) and will be independently audited on a monthly basis by Moore Johannesburg, according to the partners.

Lesaka executive chair Ali Mazanderani said ZARU was positioned to reduce the cost and increase the speed of rand payments, with potential benefits for consumers and businesses.