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The Reserve Bank of Australia (RBA) has struck its most sceptical tone to date on the prospect of issuing a retail central bank digital currency (CBDC), but it remains positive about wholesale CBDC.
In a new report on CBDC and the future of digital money, the RBA said it sees “no clear public interest case” to issue retail CBDC at present.
The central bank said it has looked at other jurisdictions that have issued a retail CBDC and has found that their motivations for doing so “have less resonance in the Australian context”.
It also noted that these jurisdictions are exclusively emerging market economies, whose payment systems are significantly less developed than Australia’s.
“This recognises that Australians are currently well served by a retail payments system that, by global standards, is efficient, innovative and safe,” it said.
“However, there are many potential benefits and costs to consider, and this assessment will be revisited as more information becomes available, including lessons from the experiences of other jurisdictions.”
RBA will reassess in 2027
In the report, the RBA and the Treasury said they have committed to a three-year work plan on CBDC. This will include further exploration of retail CBDC, although the two agencies will prioritise research and experimentation using wholesale CBDC.
Beginning in 2025, the RBA and the Treasury will launch new industry and academic forums to gather insights and perspectives on both retail and wholesale CBDC.
They will also open up the issue of retail CBDC to further public engagement through surveys and consultations, in an effort to understand the public’s needs, preferences and concerns.
In 2027, the RBA and the Treasury will publish a follow-up paper on the costs and benefits of a potential CBDC, with reference to the experience of other jurisdictions.
By that time, the two agencies said, it is “possible” that “at least one” advanced economy will have issued a retail CBDC.
RBA warms to wholesale CBDC
Compared to retail CBDC, the RBA said that the potential benefits and use cases of wholesale CBDC “seem more tangible at this point”.
According to the central bank, the “most compelling proposition” in favour of CBDCs is for their use in wholesale markets, particularly in tokenised asset markets.
In the years ahead, one key policy question that the RBA will consider is how best to implement tokenisation in wholesale markets with support from both public and private sector entities.
The RBA referred to similar pilots and experimentation being carried out by both the Swiss National Bank and the European Central Bank (ECB) as points of interest.
As covered by Vixio, the Swiss National Bank is piloting a wholesale CBDC for settling tokenised assets on the regulated platform of SIX Digital Exchange (SDX).
Like the RBA, the Swiss National Bank has also expressed scepticism about the need for a retail CBDC.
The RBA will continue to explore the use of CBDC in wholesale tokenised assets trading through Project Acacia, a collaboration with the Digital Finance Cooperative Research Centre (DFCRC), a public-private initiative based in Australia.
Next month, the RBA will launch the public phase of Project Acacia, which will look into increasing efficiency, transparency and resilience in wholesale markets through tokenisation and new settlement infrastructure.
Brad Jones, assistant governor for financial systems at the RBA, said the central bank is making a “strategic commitment” to prioritise wholesale digital money and infrastructure, including wholesale CBDC.
“At the present time, we assess the potential benefits as more promising, and the challenges less problematic, for wholesale CBDC compared to a retail CBDC,” he said.
