Australian Wholesale CBDC Gets Boost With 3-Year Plan

Key Points:

• The Reserve Bank of Australia will prioritize exploring wholesale CBDCs due to the potential challenges and limited benefits of retail CBDCs.
• The RBA has outlined a three-year roadmap to assess Australian wholesale CBDCs and settlement methods.

The Reserve Bank of Australia (RBA) has announced it will prioritize exploring wholesale central bank digital currencies (CBDCs) over retail variants due to potential complexities and limited benefits associated with the latter.

Read more: Australian Bitcoin ATMs Are Now Seeing Impressive Growth

RBA to Focus on Australian Wholesale CBDC Over Retail Variants

Assistant Governor Brad Jones said a retail CBDC could create “non-trivial challenges” for financial stability and monetary policy in a speech he is set to deliver in Melbourne, Bloomberg reported.

The RBA will immediately focus on developing an Australian wholesale CBDC and researching tokenized commercial bank deposits, which Jones describes as “an evolution rather than a revolution” in monetary arrangements. This may be expected to provide a smooth process for interbank payments using the efficiency of blockchain.

Meanwhile, central banks worldwide are exploring the adoption of a CBDC, with about 134 countries and currency unions—representative of 98% of global GDP—studying the option. At the moment, three countries have fully deployed their respective CBDCs, according to the Atlantic Council.

While some critics argue that digital payment systems do the job well and provide traceable transactions, hence creating several privacy concerns thereof, Jones said any decision to pursue a retail CBDC would, for that matter, rest upon the Australian government, likely with legislative changes. Decisions and legislative considerations around Australian wholesale CBDCs will depend on the details of the new arrangement.

Australia’s CBDC Exploration Involves Major Local Banks

The RBA has mapped out a three-year schedule for exploring digital currency options, including assessing how Australian wholesale CBDCs and new methods of settlement could facilitate tokenized markets through mid-2025. Work on examining the feasibility and possible design of retail CBDCs will be initiated in 2026, with the outcome expected to be ready by the end of 2027.

The bank also plans, along with the government of Australia, to publish a joint paper on the future of digital money later on Wednesday. More locally, ANZ Group Holdings and Commonwealth Bank of Australia have participated in the pilots of CBDCs.

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