Australia central bank to focus on wholesale digital currency rather than retail
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The Reserve Bank of Australia will reportedly start a project with the industry on wholesale CBDC and tokenised commercial bank deposits.
PHOTO: REUTERS
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SYDNEY – The Reserve Bank of Australia (RBA) said it will focus on the possible use cases for a wholesale central bank digital currency given the modest likely benefits and potential complications from a retail variant.
A retail central bank digital currency (CBDC) would create “non-trivial challenges” for financial stability and monetary policy implementation, RBA assistant governor Brad Jones said in the text of a speech due to be delivered in Melbourne on Sept 18.
As an immediate priority, the central bank will start a new project with the industry on wholesale CBDC and tokenised commercial bank deposits, Mr Jones said. A wholesale CBDC “would represent more an evolution than revolution in our monetary arrangements”, he added.
Central banks around the world are assessing blockchain technology, with potential gains in the speed and cost of real-time interbank payments a key area of interest.
Some 134 countries and currency unions – representing 98 per cent of global gross domestic product – are exploring a CBDC, and three nations have fully launched one, according to the Atlantic Council.
Some critics argue modern digital payments are already efficient and that CBDCs bring potential privacy concerns as transactions can be tracked.
Mr Jones said that if a public policy case were to ever emerge in favour of a retail CBDC, the Australian government would be the ultimate decision authority and it would almost certainly require legislative change. For a wholesale CBDC, the decision making and legislative implications would depend on the new arrangement, Mr Jones added.
The assistant governor laid out a road map for a three-year digital money work plan.
An assessment of how wholesale digital money and new settlement methods could support tokenised markets runs from 2024 to the first half of 2025. An evaluation of the merits of and design issues for a retail CBDC is due to begin in 2026 and conclude in 2027.
The Australian government will publish a joint paper with the RBA on CBDC and the future of digital money on Sept 18. ANZ Group Holdings and Commonwealth Bank of Australia are among the local institutions that have already participated in pilot CBDC projects. BLOOMBERG
