In a recent address at the Intersekt Fintech Conference in Melbourne, Brad Jones, Assistant Governor of the Reserve Bank of Australia (RBA), revealed a strategic pivot towards the development of a wholesale central bank digital currency (CBDC), rather than pursuing a retail CBDC.
Jones outlined that over the next three years, the RBA will concentrate its efforts on advancing wholesale CBDCs and constructing the necessary supporting infrastructure. This shift in focus comes after research indicated that a retail CBDC might not offer substantial benefits to the Australian populace.
The RBA’s initiative, known as Project Acacia, aims to explore the potential of wholesale CBDCs and tokenized deposits. The project will build on earlier research and investigate cross-border applications in collaboration with regional central banks. It will also seek to establish advisory forums and foster financial innovation through regulatory sandboxes.
Jones emphasized that the wholesale CBDC would reduce counterparty and operational risks, enhance transparency and auditability, and lower costs associated with intermediaries and compliance. Additionally, he highlighted the role of asset tokenization and blockchain technology, particularly smart contracts, in improving transaction efficiency and risk management.
Globally, 134 countries, representing 98% of the world’s GDP, are currently exploring central bank digital currencies. Of these, 66 countries are already advancing towards development or pilot phases.
The RBA’s shift towards a wholesale CBDC strategy reflects a deliberate move to bolster financial stability and efficiency by leveraging significant economic benefits over the more incremental advantages of a retail CBDC.
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