Aussie Central Bank supports private sector crypto tokens

by Arthur · July 18, 2022

Australian authorities look for a private payment solution – Photo: Shutterstock

Australian authorities have doubled their stated preference for digital currency supported by the private sector, rather than a digital central bank currency (CBDC).

At the end of 2021, the Reserve Bank of Australia (RBA) said it saw a “weak” case for retail CBDCs, and although movement on a wholesale equivalent may be possible, the central bank appears to be favoring a private sector alternative for electronic payments in the country.

Phillip Lowe, governor of the RBA, spoke at a livestreamed panel discussion of G20 finance ministers held in Indonesia on the need to set up a crypto-regulatory framework.

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Calls for crypto regulation

According to a Reuters report, Lowe said that despite a number of recent crises affecting the sector, such as the collapse of the Terra Luna blockchain and BTC’s recent price declines, the existence of cryptocurrencies deserved regulation.

BTC to US Dollars

“If these tokens are to be used extensively by society, they will need to be supported by the state, or regulated just as we regulate bank deposits,” Reuters told Lowe.

Australia’s position is at odds with a number of countries around the world.

According to the American think tank Atlantic Projects, there are currently 109 countries globally in the various stages of investigating the retail CBDC.

Bhutan supports CBDCs

These include economic minnows such as the Himilayan state of Bhutan, which is collaborating with Ripple – the company behind XRP.

Another is one of Asia’s poorest countries, landlocked Laos, which recently reversed a cryptocurrency ban and investigates retail CBDC along with Japanese technology Soramitsu.

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XRP to US Dollars

Soramitsu is also helping to pilot a retail CBDC among a group of Pacific island states, and it looks like the biggest benefit will come to less developed economies.

When Australia’s Federal Treasurer Josh Frydenberg announced a review of payments as a result of crypto and buy now pay later in December 2021, he made it clear that the existing payment rails meant that a retail CBDC was not required.

Australia ‘not a CBDC frontrunner’

Marcel Thieliant, senior economist for Australia, New Zealand and Japan at Capital Economics, spoke to Capital.com at the time and was skeptical that a retail CBDC would be introduced in Australia.

“It is clear that the RBA is not among the frontrunners when it comes to introducing a retail CBDC. The RBA also argues that its existing payment system is highly developed,” he said.