Today at the UWA Blockchain and Cryptocurrency Conference, the Head of Payments Policy at the Reserve Bank of Australia, Tony Richards, confirmed the Bank has no plans to issue a retail central bank digital currency (CBDC) just yet. Instead, the Bank will continue with research into decentralized ledger technology (DLT) and its uses.
Richards differentiated CBDCs from other digital forms of payment. He described a CBDC as a “digital alternative to cash.” That contrasts with e-money, which is stored electronically, such as with Paypal. Then there are cryptocurrencies, which use DLT and are private money not issued by a sovereign issuer. And finally, there are stablecoins which aim to have a stable value.
The push to issue a CBDC
In terms of the rationale for issuing a CBDC, Richards points out that citizens rely on physical money for financial inclusion in some jurisdictions as many do not have access to bank accounts or digital payment systems. Small developing countries in particular look to CBDCs for financial inclusion. On the other hand, the majority of Australian citizens have access to traditional and digital bank accounts.
Richards noted that while cash is still widely available in Australia, citizens and businesses have access to efficient and resilient digital payment systems, e.g. the New Payments Platform. He argues that even if there were an easy way to transition between physical money to CBDCs, with Australia’s existing payment platforms, there’s no need to issue CBDCs.
He recognizes CBDC benefits for competition in the payment services market. Decreased competition from a decline in cash usage “could result in higher prices for payments services, and possibly also in reduced innovation and poor services.” Nevertheless, he points to the Reserve Bank mandate and regulatory powers that already address competition concerns.
Richards concludes his speech by stating, “the Bank’s view is that no strong public policy case has yet emerged for the introduction of a CBDC for general use.” Instead, the Reserve Bank will take a wait and watch approach. If significant benefits appear, it claims it can easily change strategies. This way, it’ll be “avoiding any early missteps and taking full advantage of the inevitable technology learnings.” For now, the Bank is content with CBDC research on policy and technology and collaborating with external parties to explore tokenized financial assets and DLT.
Meanwhile there have been several recent publications around CBDCs , including a joint report from the BIS and seven major central banks, and others from the European Central Bank, Japan and Estonia.
