More than 140 use case proposals from the financial sector have been submitted for an Australian Central Bank Digital Currency (CBDC) pilot programme. However, Reserve Bank of Australia (RBA) warns that this could cause the Australian dollar to lose its value and cause people to completely avoid commercial banks.
In a speech that was made public by the RBA on December 8 and that Assistant Governor Brad Jones was scheduled to deliver at a central bank conference on December 8 and 9, Jones goes into great detail regarding the potential impact a CBDC may have on the Australian economy.
Since the issuance of a white paper on August 9, over 80 financial companies have proposed use-cases covering a variety of domains, including e-commerce, offline transactions, and government payments — according to Jones. The RBA has been astonished by the industry interest they have received.
The team developing the “eAUD” pilot programme is deciding which of the suggested use-cases to include in the program’s trial phase early next year. The team anticipates publishing a report on the project in the middle of 2023.
Jones also talks about the possible dangers of an Australian CBDC and highlights the liquidity problems and other problems the banks would experience if a CBDC ends up being their preferred source of assets.
According to the assistant governor, the fact that Australians prefer to keep their money in a “risk-free” CBDC may cause bank runs as a result of a large-scale withdrawal of deposits.
Although Jones argues that the central bank has no incentive to use personal information that can be used by private companies, CBDCs could also offer Australians many benefits, including privacy benefits, and could help protect monetary sovereignty that could be lost if a stablecoin or foreign CBDC fills a domestic void.
