Speaking at the 17th Central Bank Conference on the Microstructure of Financial Markets, the Reserve Bank’s (RBA) assistant governor Brad Jones said that a strong public interest case for a central bank digital currency (CBDC) has yet to be made in Australia.
The RBA has been engaged in a pilot eAUD program with the Digital Finance Cooperative Research Centre (DFCRC) for several months now, but despite receiving more than 140 use case proposals from around 80 entities, Mr Jones said the case for the introduction of CBDC hasn’t yet been made.
“As far as monetary economics goes, the introduction of a general-purpose CBDC would be revolutionary — for centuries, physical cash has been the only source of central bank-issued money to which households and non-financial firms have had access. Prior to crossing this Rubicon, a strong public interest case would first need to emerge.
“On balance, we have yet to see that case made in Australia,” the assistant governor disclosed.
Mr Jones insisted that Australia was not alone here, with no other advanced economies’ central banks having yet committed to issuing a general-purpose CBDC.
“But with our eAUD pilot program in full swing, and changes in the digital economy and money and payments landscape occurring at a frenetic pace, the bank is keeping an open mind,” he assured.
Looking ahead, Mr Jones said the next few years could prove to be more “evolutionary than revolutionary”.
“It is not hard to imagine that existing forms of digital money and payment infrastructure continue to modernise in a way that captures many of the potential benefits of a general-purpose CBDC, but in a minimally disruptive way,” he said.
This, Mr Jones noted, could include the emergence of reserve-backed payment stablecoins and tokenised bank deposits to facilitate atomic settlement of financial and real assets.
“And building on the role that exchange settlement balances already play in the Australian financial system, it also seems a smaller leap to imagine that a wholesale CBDC would circulate more expansively ahead of a general-purpose variety,” he said.
In the meantime, however, the RBA is expected to progress its CBDC research program.
“Our project team is in the process of selecting a number of proposed eAUD use cases to take forward into the pilot phase early next year,” Mr Jones said.
In conclusion, the assistant governor assured that “Australians should be confident that they will retain access to banknotes issued by the Reserve Bank for as long as they place value on them as a public good”.
