Reserve Bank Rejects Aussie Central Bank Cryptocurrency, Unsure of Facebook Libra Approval

Friday 18 September 2020, 7:00 AM AEST - 1 month ago

While other countries around the world are flirting with the idea of issuing a central bank backed crypto currency, the Reserve Bank of Australia says no — citing a lack of compelling policy.

Countries such as Sweden, Canada, and China are all actively investigating the potential benefits of a central bank issued digital currency, but the RBA isn’t swayed by the use cases of blockchain technology. In a payments paper issued on Thursday, the RAB expressed doubts regarding the future of stablecoins, along with cryptocurrencies such as Facebook’s Libra project.

The RBA has stated that it remains to be seen whether or not Facebook’s Libra cryptocurrency will gain regulatory approval and be allowed to operate in Australia. Other assessments in the paper highlight the slow rate at which cash payments are declining compared to relatively cashless countries such as Sweden.

RBA Won’t Eliminate Cash — Yet

The widespread adoption of real-time payment solutions such as the New Payments Platform place Australia ahead of the curve with regards to safe, low cost, and convenient payment platforms from traditional banks, according to the RBA.

“The (RBA’s) view is that there is currently no strong public policy case to introduce a CBDC (Central Bank Digital Currency) for retail use,” 

The RBA isn’t planning on ceasing the issuance of banknotes despite the ongoing push to minimize the use of cash in Australia, stating that it will continue to provide “reasonable access” to banknotes “for as long as Australians wish to keep using them.”

While the RBA is opposed to the concept of a central bank issued cryptocurrency, other countries are not so recalcitrant. Sweden’s Riksbank has floated the idea of an e-Krona several times over the last three years, citing the country’s rapid adoption of cashless alternatives.

The Bank of Canada, however, has taken further steps toward a central bank issued crypto, with the Bank of Canada announcing in February that it will develop the capacity to issue a retail central bank digital currency as soon as it becomes desirable.

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