The Reserve Bank of Australia (RBA) says it won’t be pursuing a retail CBDC anytime soon, instead focusing its efforts on launching a wholesale CBDC.
In a Sept.18 speech at the Intersekt Fintech Conference in Melbourne, RBA Assistant Governor Brad Jones presented the Australian central bank’s three-year roadmap, which focuses largely on the development of a wholesale CBDC.
“I can confirm that the RBA is making a strategic commitment to prioritize its work agenda on wholesale digital money and infrastructure – including wholesale CBDC – rather than retail CBDC.”
Jones said the RBA’s research had found a retail CBDC offered little in the way of genuine innovation for public use in Australia, whereas a wholesale CBDC would offer several key advantages to commercial and central banks.
These advtanges include reducing counterparty and operational risks, increasing transparency and auditability, enhancing liquidity and transaction capabilities, and reducing intermediary and compliance costs.
Brad Jones at the Intersekt Fintech Conference. Source: Cointelegraph
He added that the potential benefits of a retail CBDC appeared to be “modest or uncertain” for the Australian public, with a retail version of the digital currency introducing several challenges including higher borrowing costs, increased risk of bank runs, and problems with implementing the relevant monetary policy.
Jones explained that the central bank’s “most immediate priority” is to launch the public phase of Project Acacia to explore the wholesale CBDC and tokenized commercial bank deposits.
Project Acacia aims to build on the central bank’s previous research into CBDCs and explore future cross-border applications with regional central banks.
Related: Australians wouldn’t value retail CBDC for its privacy or safety, RBA finds
It also plans to establish industry and academic CBDC advisory forums, support reforms to regulatory sandboxes for financial innovation, and conduct public engagement on a retail CBDC.
RBA wholesale CBDC roadmap. Source: RBA
Jones also noted that the RBA was undertaking further research into the potential benefits of asset tokenization and the role of blockchain and smart contract technology in the central bank’s financial operations.
“The programmability of tokens via smart contracts, and the ability to free up collateral and reduce counterparty risk by atomically exchanging money and assets on the same ledger, have been of particular interest in experimental research.”
According to the Atlantic Council, 134 countries, representing 98% of global GDP, are exploring central bank digital currencies.
It also revealed that 66 countries are in the advanced phase of exploration, development, pilot, or launch.
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