Reserve Bank of Australia Official ‘Not Convinced’ of Need for Digital Dollar

Published at: Oct. 25, 2018

The Reserve Bank of Australia (RBA) assistant governor Michelle Bullock said that the bank has not been convinced of the need to create a digital Australian dollar, local business and finance news outlet The Australian Financial Review reported Oct. 24.

Speaking at the Sibos 2018 banking and financial conference in Sydney, Bullock reportedly said that she is “interested to consider what frictions these technologies are designed to address [but] in many cases I just don't see what the point is."

Among “touted” benefits digital currency could provide to central banks, Bullock cited the possibility to technically leapfrog the monetary policy problem of the “lower bound,” by allowing a central bank to support negative interest rates. Although, it is still "an untested and quite a different idea", she added.

Bullock said that before the bank could reasonably adopt a new asset like a digital currency, there would need to be a proven use case fore it. She added that proponents for a digital dollar should first demonstrate why current payment systems “can’t deliver” the same benefits of a distributed ledger. She stated:

“I’m not convinced that it has a use.”

Regarding the efficiency gain associated with the issuance of national currencies onto a distributed ledger, Bullock said that it is “not material” with respect to the other costs in the system. The assistant governor stated that digital currency “certainly would be a simplification,” although:

"It isn't a requirement in the sense the inefficiencies we are seeking to resolve here do not reside in that last final exchange of cash in an existing digitized cash system with corresponding securities — that is actually a highly efficient and high-speed exchange."

In June, the central bank of Australia denied it would issue its own cryptocurrencies, calling Bitcoin (BTC) “fascinating” but “inefficient.” Tony Richards, head of the RBA’s payments policy, stated that issuing the bank’s own token is “not a high priority for us, but it's something we're continuing to work on.”

Also in June, Board director of the Swiss National Bank (SNB) Thomas Moser said that cryptocurrencies and blockchain technology are too primitive to consider issuing a state-backed digital currency. Moser compared blockchain in its present condition with the “useless innovation” of compact discs (CDs), stating that “something similar has to happen with BTC. People will only switch to something new if it works better or is cheaper.”

Tags
Altcoin
Cryptocurrencies
Government
Australia
Fintech
Central Bank
Banks
Related Posts
Digital ruble could be still vulnerable to fraud, Russian banks warn
Russia’s central bank digital currency, or CBDC, could contain a number of risks related to cybersecurity and fraud, according to several local financial institutions. The Association of Russian Banks, or ARB, has released its official feedback on Russia’s digital ruble project on Jan. 13. The study included 17 ABR credit institutions in Russia accounting for 58% of the total assets of the domestic banking system. According to the report, the majority of ARB members believe that risks associated with the digital ruble are similar to those of cashless transactions powered by banking accounts and cards, as well as cryptocurrencies. The …
Technology / Jan. 13, 2021
UK will likely need to issue a digital currency, says BoE deputy governor
The Bank of England's deputy governor Jon Cunliffe has argued that a sea change in the issuance and circulation of public and private monies could make general access to a digital form of central bank money crucial for ensuring financial stability in future. In a speech at the OMFIF Digital Money Institute in London, Cunliffe reflected on past, present and future trends in the widespread use of private money issued by commercial banks, noting that the COVID-19 pandemic has accelerated existing trends away from public to private money for everyday payments. About 70% of respondents to a recent Bank of …
Adoption / May 14, 2021
China’s Central Bank Completes Top-Layer Design and Joint Tests of Planned CBDC
The central bank of China has completed the top-layer design and joint testing of its soon-to-be-released central bank digital currency (CBDC). As domestic news outlet Sina reported on Jan. 10, People’s Bank of China (PBoC) accomplished the top-layer design of the planned digital yuan, developed relevant standards, carried out research and development and a joint testing of the CBDC. The bank set forth the latest developments in a dedicated article, also highlighting plans to improve cybersecurity of the financial industry network and formulate rules for the accreditation of critical information infrastructure. First real-world tests Reports about China planning to conduct …
Adoption / Jan. 10, 2020
Swiss Government Quashes ‘E-Franc,’ Says Current Risks Outweigh Benefits
The government of cryptocurrency-friendly Switzerland has shot down the idea of issuing a digital Swiss franc, for now. According to a Dec. 13 press release published on the Federal Council’s website, the Federal Council approved a report exploring the opportunities and risks of issuing a digital form of the country’s national currency, the franc. Following an analysis, the Federal Council concluded that a central bank digital currency (CBDC) cannot meet expectations for payment efficiency, effective monetary policy, and a more stable financial system. The council said: “Universally accessible central bank digital currency would bring no additional benefits for Switzerland at …
Altcoin / Dec. 13, 2019
German Central Bank: Cryptos Are Not a Threat to Financial Stability
Central Bank of Germany representative Burkhard Balz said that cryptocurrencies do not pose a threat to financial stability. Balz’s comments came at a talk at the European Parliament, as reported in a post published on the institution’s website on July 9. Burkhard Balz, Member of the Executive Board of the Deutsche Bundesbank, stated that “crypto-tokens currently do not pose a risk to monetary or financial stability.” Furthermore, he also noted that “gaps may occur where they fall outside the scope of regulators’ authority or where there is an absence of international standards.” This idea is in line with the claims …
Altcoin / July 11, 2019