Reserve Bank Of Australia Says There’s No Need For CBDC

Reserve Bank of Australia says there’s no need for CBDC. A local news reported on Sept. 17, that the Reserve Bank of Australia’s latest payments paper has taken a cautious and sceptical line toward CBDCs as well as private-sector stablecoins.

The RBA does not believe there is currently a strong policy case for issuing a CBDC in Australia, pointing to the success of the country’s efficient, real-time New Payments Platform.

Additionally, while the use of cash for transactions is broadly declining, Australians are not relinquishing banknotes as quickly as other citizens.

The paper states that amid the COVID-19 pandemic, demand for cash actually saw a significant uptick. RBA has therefore pledged to continue to provide access to banknotes “for as long as Australians wish to keep using them.” 

RBA stressed the uncertain horizon for prospective currencies such as Facebook’s Libra, noting that it remains to be seen whether the currency will “gain regulatory approval and become operational.”

As the RBA sees it, a CBDC could have significant downsides for the country, including higher funding costs for commercial banks.

The paper noted “Moreover, a CBDC could increase the likelihood of a run on the banking system in case of financial stress. RBA claimed that “in the presence of a CBDC, a run on the banking system as a whole would become feasible; if depositors had concerns about the entire financial system, they could seek to make large-scale transfers of commercial bank deposits into CBDC.” 

[image: Benjamin Punzalan]

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