Responding to concerns about monetary sovereignty, the Reserve Bank of Australia (RBA) said the public policy case for general-purpose issuance or retail CBDC in Australia remains considered.
The RBA’s view, voiced by the bank’s chief policy officer Tony Richards, is challenging the influx of growing interest in other jurisdictions about the potential for central bank-issued central currencies to counter the decline in cash use among residents.
Earlier this month, seven central banks, together with the Bank for International Settlements (BIS) published a report setting out the main requirements for creating a digital currency for central banks.
Cash Transactions Still Widespread
Richards states that even though the use of cash for transactions is decreasing, money is still widespread and accepted as a means of payment. Also, Australian households and businesses are well served by modern, efficient and sustainable payment systems that have seen significant innovation in several ways over in recent years.
Richards believes that concerns about the loss of monetary sovereignty get exaggerated. At the same time, a regulatory system can overcome the issue of data confidentiality in the private stable coin proposal.
“When a stable Australian dollar-denominated currency is traded in Australia, it is likely to be subject to significant security and stability regulations,” he said.
He added that all stablecoins marketed in Australia would be subject to all required standards of confidentiality as well as in other areas such as data use, competition, KYC and screening for AML and CTF purposes. It is not clear that CBDC is or is a solution to specific problems or that currently there is significant demand for one.
Meanwhile, the RBA is advancing research on the technological and policy implications of potential CBDC wholesale in the bank’s innovation lab. Previous work included developing a limited evidence-based concept for a DLT-based interbank payment system using the symbolic CBDC form supported by ESA balances.
Richards said that the bank is currently working with several outsiders on a project to add a tokenized financial asset to this proof of concept. They will investigate the impact of delivery completion on distributed book platform payments, as well as other programmability features of CBDC and financial assets. It is an exciting study, they say, and they will provide more information about it promptly.
At the EBAday 2020, the topic ‘The Turning Point in Payments Transformation’ will address CBDCs.The European Central Bank has launched a public consultation on the possibility of creating a digital euro. It was after a high-level working group outlined a possible scenario where central banks would have to install their cryptocurrencies.