Speaking at an event on Wednesday, the assistant governor at the Reserve Bank (RBA), Brad Jones, said the RBA is making a strategic commitment to prioritise its work agenda on wholesale digital money and infrastructure – including wholesale central bank digital currency (CBDC) – rather than retail CBDC.
“At the present time, we assess the benefits to the economy as more promising, and the challenges less problematic, for a wholesale CBDC compared to a retail version,” Jones said.
“This recognises that unlike a retail CBDC that would be issued for use among the public, a wholesale CBDC would represent more an evolution than revolution in our monetary arrangements.”
Jones also announced the RBA’s commitment to a three-year applied research program – Project Acacia – run in collaboration with Treasury to probe the future of digital money in Australia.
The project, set to launch next month, will explore opportunities to uplift the efficiency, transparency and resilience of wholesale markets through tokenisation and new settlement infrastructure.
“The focus will be on understanding how new ledger arrangements and concepts like ‘programmability’ and ‘atomic settlement’ in tokenised markets could unlock benefits for the Australian financial system and wider economy,” Jones said.
“We don’t have all the answers here, so look forward to engaging with industry partners who have an ability and appetite to innovate with the national interest in mind.”
The RBA and Treasury are committed to reassessing the merits of a retail CBDC over time, the assistant governor said, with a follow-up paper to be published in 2027.
“By this time, we will have had an opportunity to reflect on feedback from community engagement and to conduct further research into the implications of competing design options. There should also be a richer vein of international experience to draw on,” he said.
Jones believes that at present, a retail CBDC would create non-trivial challenges for financial stability and monetary policy implementation.
“In jurisdictions that have issued a retail CBDC or indicated that it is quite possible in coming years, the main motivations have less resonance in Australia,” he said, but admitted that given the implications of a retail CBDC are still to be fully understood, the RBA will continue to examine these issues.
Ultimately, Jones said: “Whatever the shape of future innovation in our financial system, it is reasonable to expect central bank money will continue to serve as the ultimate safe settlement asset, particularly in systemically important markets”.
