Digital Aussie Dollar Still Well Down Pecking Order – RBA
(21 September 2020 – Australia) The Reserve Bank of Australia (RBA) remains unconvinced of the express stated need for a digital Australian Dollar now yet plans to continue to consider the use cases including how it may be adapted to other policy implications.
In the research paper Retail Central Bank Digital Currency: Design Considerations, Rationales and Implications, the central bank asserted there was still no strong policy case to introduce a central bank digital currency (CBDC) for retail use in Australia. Despite speculation consumers and merchants are preferencing other methods of acceptance over cash, the RBA maintains demand for banknotes had increased ‘significantly’ during the pandemic albeit against a steadily declining downtrend for some decades.
The announcement was made three years after RBA Governor Philip Lowe first dampened speculation of the prospect of an ‘eAussie Dollar’ in the same vein as Bitcoin or other cryptocurrencies. With the launch of the New Payments Platform (NPP) in 2018, the RBA confirmed both households and businesses were now ‘well served by a modern, efficient and resilient payment system’.
The central bank is also researching the technological and policy implications of a wholesale CBDC through its in-house innovation lab which has also previously explored the retail CBDC. The innovation lab conducted a limited proof-of-concept (PoC) of a distributed ledger technology (DLT) based interbank payment system using a tokenised form of CBDC backed by exchange settlement account (ESA) balances in 2019. The RBA is currently working to extend this PoC to incorporate tokenised financial assets to explore the implications of delivery-versus-payment settlement on a DLT platform as well as other programmability features.
“The main conclusion is that the public policy case for issuing a general purpose CBDC in Australia is still to be made. Even though the use of cash for transactions is declining, cash is still widely available and accepted as a means of payment” the paper’s authors Tony Richards, Chris Thompson and Cameron Dark stated.