The Reserve Bank of Australia (RBA) has announced that the introduction of a central bank digital currency (CBDC) in Australia is not imminent, as it requires more policy deliberation and research.
The announcement follows the completion of a pilot study conducted by the RBA and the Digital Finance Cooperative Research Centre (DFCRC), a consortium of industry, academic, and government partners that aims to advance the digital finance sector in Australia.
The pilot study from March to July 2021 involved issuing a limited-scale CBDC by the RBA in a controlled environment to selected industry stakeholders.
The study explored 16 proposed use cases for a CBDC, submitted by various financial, technology, and legal participants.
Unlike previous experiments where the CBDC was only a simulation, the pilot CBDC had real legal status as a claim on the RBA.
According to the study, a CBDC could offer advantages to Australian households and businesses, such as facilitating intricate payment arrangements beyond the scope of existing payment systems.
The study also showed the substantial interest of industry participants in exploring the tokenization of tangible and financial assets on DLT platforms, with the CBDC as the settlement medium.
Moreover, the study indicated the possibility of using CBDC in debt securities markets, which currently have long settlement durations.
However, the study also identified various legal, regulatory, technical, and operational challenges associated with an Australian CBDC.
These challenges include integrating CBDC with novel business models within existing frameworks, ensuring interoperability and scalability of DLT platforms, addressing privacy and security risks, and managing governance and liability issues.
RBA Says CBDC is Not Urgent for Australia
The RBA and the DFCRC published their report on the pilot study today, stating that while a CBDC holds the potential to enhance efficiency and resilience in some aspects of the payment system, further in-depth research is needed for a comprehensive understanding.
They also stated that exploring CBDCs in advanced economies is ongoing and that substantial policy deliberation regarding implementing a CBDC in Australia is expected several years from now.
The RBA also noted that the Australian payment system effectively serves users’ needs and that there is no urgent case for introducing a CBDC in Australia.
The bank said it will continue to monitor developments and collaborate with other central banks and stakeholders on this topic.
The report also raised a cautionary note, stating that some test cases from the pilot project illuminated uncertainties surrounding the integration of CBDC and novel business models utilizing it within existing legal and regulatory structures.
