The Australian central bank acknowledges uncertain limits and benefits in the potential issuance of a retail CBDC for the Australian public: focus on a wholesale CBDC.
The Reserve Bank of Australia (RBA) has decided not to develop a retail CBDC in the near future, focusing instead on a wholesale CBDC. This announcement was made by RBA Deputy Governor Brad Jones during the opening speech at the Intersekt Fintech conference held on September 18 in Melbourne.
The RBA has outlined a three-year plan primarily aimed at developing a wholesale CBDC. Brad Jones stated that the bank intends to prioritize activities related to digital currency and wholesale infrastructure, considering the benefits of a retail CBDC for the Australian public to be limited or uncertain. He expressed concerns about potential implications, including increased borrowing costs, the risk of bank runs, and challenges in implementing monetary policies.
Due to these factors, the RBA prefers to focus its resources on developing a CBDC that can offer more significant advantages in the realm of wholesale banking. According to Jones, a wholesale CBDC offers several benefits for commercial and central banks: reduced counterparty and operational risks, greater transparency and verifiability, improved liquidity and transaction capabilities, and lower intermediation and compliance costs.
Project Acacia presentation
The central bank announced that its immediate top priority will be the launch of the public phase of the Project Acacia. The project will focus on exploring the wholesale CBDC and tokenized commercial bank deposits. The goal is to leverage the bank’s previous studies and explore future applications in cross-border transactions in collaboration with regional banks.
Collaboration between industry and academia
The RBA also intends to establish advisory forums with industry and academia for CBDCs, promote reforms for financial innovation, and initiate public engagement on a retail CBDC. The research aims to examine the potential benefits of asset tokenization and the role of blockchain technology and smart contracts in central bank financial operations.
