Recently, the Reserve Bank of Australia (RBA) said it has closely monitored developments in cryptocurrencies and is exploring whether there is potential value in developing an Australian digital currency. The digital currency to be proposed will allow commercial banks and other corporates across the country use to speed up transactions.
The reserve bank has been carrying out Ethereum-based trials for a potential digital coin and is looking into how 3rd parties can contribute to its research.
In a proposal presented before the Senate Select Committee, the RBA noted that these innovations in payment systems could help boost productivity in the broader economy and push Australia towards becoming a digital economy.
The bank assessed that there is presently no case for building a central bank digital currency (CBDC), but wants to leverage blockchain for household use.
Other benefits of a digital currency would be to facilitate ‘atomic transactions’ which only allow a transaction to go ahead if all parts of an exchange are executed, reducing settlement risk.
RBA Not Convinced About Crypto
According to the RBA, crypto has the potential to affect its mandates as the issuer of banknotes and operator of the country’s real-time gross settlement system.
In fact, the RBA does not see cryptocurrencies like Bitcoin taking off in Australia as a means of payment, given its extreme volatility. However, the reserve bank, in its submission assured everyone that it is ‘all-in’ for the stable coins emerging in the country.
The bank, however, believes that the next generation of cryptocurrencies could become more widely used in the future.
Facebook’s Libra will not be allowed in Australia
According to the same proposal, the RBA has quelled any hopes of Facebook launching its digital currency in the country.
Even though Libra cryptocurrency has the potential to be broadly popular, given the involvement of big corporations such as Facebook that may leverage their large existing user bases and technological capabilities, it would not be allowed in Australia.
The bank argued that it endorsed the view of the G7 that global stablecoins should not be permitted to launch until risks relating to consumer/investor protection, data privacy, monetary policy, and financial stability are addressed.
Furthermore, the bank said it was unclear if there would be strong demand for Libra-style stablecoins, given the availability of many low-cost real-time payment methods.