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Australia’s central bank and treasury have announced that they will prioritize work on a wholesale Central Bank Digital Currency (CBDC) over a retail version, as outlined in a recent review of CBDC research. The review also provides a three-year roadmap for the country’s digital currency efforts.
The Reserve Bank of Australia (RBA) concluded that there is not yet a compelling public interest case for issuing a retail CBDC. This decision is influenced by the fact that Australia’s current retail payment system is both capable and resilient, serving the public effectively. The RBA notes that in countries where retail CBDCs are being explored or issued, the motivations for doing so do not strongly apply to Australia.
However, the RBA and Treasury remain open to reassessing this stance in the future as the potential benefits and costs of retail CBDCs become clearer both internationally and domestically.
The report highlights the significant role a wholesale CBDC could play in improving the functioning of Australia’s wholesale financial markets. It notes that, in conjunction with other forms of digital money and infrastructure improvements, a wholesale CBDC could enhance market efficiency and resilience.
Brad Jones, Assistant Governor (Financial System) at the RBA, commented: “The RBA is strategically prioritizing wholesale digital money and infrastructure, including a wholesale CBDC. At this time, we view the benefits of a wholesale CBDC as more promising, with fewer challenges compared to a retail CBDC.”
Next month, the RBA will launch the public phase of ‘Project Acacia,’ which will explore how tokenization and new settlement infrastructure can improve the efficiency, transparency, and resilience of wholesale markets. The project will focus on examining how innovations like programmable money and atomic settlement in tokenized markets could deliver tangible benefits to Australia’s financial system and broader economy.
“This initiative is part of a broader effort to increase our engagement with industry and stakeholders, focusing on how our monetary frameworks can better support the Australian economy in the digital age,” Jones added.
Australia’s emphasis on wholesale CBDCs reflects a growing trend of central banks exploring digital currencies as part of modernizing their financial systems while carefully weighing the benefits and challenges posed by these new technologies.
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