The report, submitted to the Australian Senate Select Committee for Financial Technology and Regulatory Technology, says that CBDCs have stimulated wide-ranging discussions in national financial institutions.
However, officials allegedly see little merit in issuing an AUD-backed stablecoin for retail banking users or the general public.
Although the bank sees hurdles for retail use, it is highly interested in exploring national digital currencies for business and trade purposes.
The RBA explains:
“The Bank is not currently considering a CBDC for retail use, but notes the availability of a wholesale settlement token based on distributed ledger technology could allow payment and settlement processes to become more integrated with other business processes.”
Despite this, the report says that a sovereign Australian dollar CBDC is currently ranked as the “least effective” of 14 potential measures to promote growth in the Australian fintech industry.
Nevertheless, the RBA has established an innovation lab to explore new financial technologies with a research focus on creating an Australian dollar CBDC.
The report explains:
“One example of work in this area undertaken in the Bank’s Innovation Lab was the development of a proof-of-concept of a wholesale settlement system running on a private, permissioned Ethereum network.”
The report says that the proof-of-concept worked with several commercial banks in establishing the usefulness of an Australian dollar CBDC.
Also on the agenda was Facebook’s Libra coin and the Calibra ecosystem, which the RBA report describes as a “global stablecoin”.
While the bank admits that Facebook may be able to leverage its existing user base for the new payments system, the report questions how successful Libra would be in Australia.
The bank predicts that there would be little demand for Libra, or indeed any global stablecoin, as the nation already has access to a wide range of financial products.
The report reads:
“In Australia, it is unclear that there will be strong demand for global stablecoins even if they do meet all regulatory requirements, particularly for domestic payments.”
In its concluding remarks, the RBA says it will continue its research into CBDCs and stablecoins and potentially explore partnerships with external technology providers.
You can read more about Facebook’s Libra coin plans here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.