Introduction

The RBA is Australia’s central bank. Its duty is to contribute to the stability of the currency, full employment and the prosperity and welfare of the Australian people. It does this by conducting monetary policy to meet an agreed inflation target, works to maintain a stable financial system, acts as banker to the Australian Government, regulates the payments system and issues the nation’s currency. 

Over the past few years, the RBA has been exploring whether there is a role for a CBDC in Australia in the context of the RBA’s responsibilities for issuing the currency and overseeing the development of the payments system. The RBA is an industry partner of the DFCRC, and is using its involvement to support its research on CBDC

Context

Activity and innovation in digital finance suggests new business models might emerge in a tokenised ecosystem. Central banks are working to understand the role of value transfer in these emerging digital economies, because of their role in the issuance of money, maintaining the stability of the financial system, and supporting the development of the payments system. 

In this context, central banks globally are actively exploring the potential role, benefits, risks, and other implications of CBDC. This has involved the publication of discussion papers, public consultations, and the development of proofs of concept and CBDC pilots involving real financial transactions. A small number of jurisdictions have issued or are planning to issue CBDC. 

An issue that has received less research attention to date, particularly for countries with modern and well-functioning payments infrastructure like Australia, is the rationale for CBDC, specifically the potential economic benefits of introducing one. 

Prior work by the RBA suggested there was not yet a compelling case for issuance of a ‘retail’ CBDC in Australia. However, a proof of concept of a CBDC developed as part of Project Atom demonstrated the potential for a ‘wholesale’ CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions. 

The RBA was also involved in Project Dunbar with the BIS Innovation Hub and a number of other central banks, which indicated that enabling financial institutions to directly hold and transact in CBDCs from different jurisdictions on a shared platform could reduce the reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions. The RBA has also indicated that it is worth considering whether appropriately regulated privately issued stablecoins could play a role in the future in supporting transactions in a tokenised economy.

The RBA’s research into CBDC does not reflect any intention to discontinue access to physical cash. The RBA is committed to ensuring Australians continue to have good access to physical cash for as long as people need or want to use it.

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