Australia Central Bank Shifts Focus on Wholesale CBDC

Australia Central Bank Focuses Wholesale CBDC: Launches 3 year program

The Reserve Bank of Australia (RBA) has announced that it will not be pursuing a retail central bank digital currency (CBDC) for the time being. Instead, the RBA will concentrate on launching a wholesale CBDC, which is seen as more beneficial for the country’s financial system. In a speech on September 18 at the Intersekt Fintech Conference in Melbourne, RBA Assistant Governor Brad Jones shared the central bank’s three-year roadmap, outlining its focus on wholesale digital money and infrastructure.

Australia Central Bank: Wholesale CBDC Over Retail?

According to Jones, the RBA’s research found little advantage in developing a retail CBDC for public use. He explained that a wholesale CBDC, on the other hand, would bring several significant benefits to commercial banks and the central bank itself. These advantages include reducing counterparty and operational risks, increasing transparency, improving liquidity, and lowering intermediary and compliance costs. Retail CBDC, on the other hand, could introduce problems like higher borrowing costs and a greater risk of bank runs, making it less appealing for Australia at this time.

Australia Central Bank to launch Project Acacia

Jones highlighted that the RBA’s main priority is now to launch the public phase of Project Acacia, a research project focused on wholesale CBDC and tokenized commercial bank deposits. This project will build on previous research and explore the possibility of using CBDCs in cross-border applications with other central banks in the region. The RBA is also working to establish industry and academic advisory forums to support CBDC innovation and regulatory reforms.

Blockchain and Smart Contracts

In addition to the wholesale CBDC focus, the RBA is conducting further research into the benefits of asset tokenization and how blockchain and smart contract technology can be used in the central bank’s operations. Jones noted that smart contracts could make financial transactions more efficient by freeing up collateral and reducing risks. 

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